patrick.net

Randy, are you sure this is true even if the mortgage agreement predates the lease agreement?

IANAL, so I can't be sure. But putting on my legal-channeling helmet (this thing sure hurts):

I would be extremely surprised if courts moved to shift a hardship to a party which could not have reasonably taken action to prevent their position in the situation. Courts are all about creating equity of justice. There would pretty clearly be no justice in punishing renters for the sins of speculative owners. I imagine this would be true so long as the renter did not in any way participate in or encourage the speculation. Perhaps leases with a purchase option would change the outcome.

I'd love to hear an actual lawyer's opinion. (Did I just say that? But seriously, this is exactly why we have lawyers). My direct advice to anyone caught in this situation would be DO NOT BE CHEAP, HIRE A GOOD LAWYER. I am pretty sure a decent lawyer would keep you from ending up on the street.

What’s the deal?

DEniAL.

There would pretty clearly be no justice in punishing renters for the sins of speculative owners.

How about the "sin" of being a jealous bitter renter? :)

George,

So long as the owner at the time had standing to enter into the lease agreement (this is probably what clever lawyers would argue about), the contract would be binding and survive foreclosure and bankruptcy. The court would just assign the lease contract to the new legal owner. The risks that the lender undertook were the obligation of the lender to understand, so long as no coercion or fraud took place. Even if the speculator/owner committed fraud, so long as they entered into a legal lease contract that contract would pass with the title.*

(No more pretending I'm a lawyer for the rest of the day.)

*I could be entirely wrong, but I'm sure enough I wouldn't lose any sleep over it.

Lunarpark,
I'm seeing stranger things then that. There is a house near my place that has been for sale since August. Sort of ugly, 60's bradybunch looking thing with a gravel garden out front for 675k. So far, it has been for sale 3 times, with three diffrent realtor companies. Each and every time, they put "coming soon!" on the sign( now century 21) and then it gets listed at the same price. The funny thing is that I met the couple that own it accidentally at my yard sale. They pull up in an old black Thuderbird( I own an old car too so I know em') anyhow, they were youngish early 30-something, as in too young to have had it that long, and probably just long enough to cash out. People are doing all sorts of tricks to make the false appearance of homes being sold like no tommorow. Open up the paper, they're ALL SOLD, or PENDING!, yet interestingly enough, half of the homes that were sold are actually from West Oakland..NOT Alameda. In small text on the real estate section, it shows that 6 homes sold.. a paltry amount, yet by seeing the screaming ads, you'd think all the houses in Alameda must be selling like hotcakes. I actually wrote to the paper about it, at which point they kindly published the letter, and told me they were working on it. We'll see.

“coming soon!” - yeah I saw a few of these while I was driving around last weekend. Oh how exciting, coming soon! Oh I can't wait!

I'm actually surprised the unit my building hasn't sold. It's priced to move and it's a remodel. I thought it would sell in a couple of weeks. Maybe we are finally running out of greater fools.

newsfreak,

Pure genius.

Someone wrote:

> I noticed lots of contributors describing the pressure they were
> under from their wifes to buy a nest for them.

Then SQT wrote:

> I read something recently that said the single largest demographic
> that bought homes in the last year were single women.
> But it brings up some interesting questions. For example,
> are women buying because they want to prove they can do
> it themselves, or are they more susceptible to the emotional
> pressure to buy? I think it’s a bit of both.

There is a growing number of women in America that bought in to the feminist "you can have it all" line. Millions of women over the past 20 years didn't "just want to be a wife" so they worked hard went to good schools, worked for a couple years while filling their free time with resume padding volunteer work to get in to good grad schools then hit the ground running in their careers trying to prove that they were as good as men. By the time that they were in their mid 30's they decided that they wanted kids and started looking for the perfect husband a tall good looking professional who is even more successful than they are. No one told these "have it all" gals that tall good looking successful guys in their late 30's that want to get married are not interested in hard working professionals their own age when they have their pick of the many hot looking former sorority girls in their late 20's that hang out at the Bay Club and Marina Cow Hollow bars. I know many of these gals (since married friends are always trying to det me up with them) who have decided to buy since they want to own "something" as they grow old alone with their cats...

Sure, in a standard lease. In a Lease-Purchase though (which DinOR and I were discussing), it becomes a different matter entirely, at least, I think it does.

Well, if the final exercise price is below the loan principal it is going to be a short-sale for the seller anyway, even if he does not default. In that case, you can simply walk away without exercising the option.

I would be extremely careful with any lease-purchase deal. It is full of traps for both sides. Consult a real estate lawyer.

George,

I stand corrected. I was getting confused by Fewlesh's question and yours and DinOR's conversation. A purchase option may well complicate things for the lease holder quite a bit.

What would be interesting is if the landlord insisted upon purchase options, and gave no non-option alternative to the lessee. Then, the court might still rule that the contract survives, and sever the option portion.

I am PC - who would want to buy a Mac these days???

Unless a lease with an option to purchase is recorded on title "superior" (aka before) the lender's note and dead of trust (or mortgage) it will be gone after a foreclosure (unless the new owner of the property decided to reaffirm it).

Anyone (other than a stupid mom & pop lender) will require any tenant with a lease recorded on title to execute a subordination letter before they make a loan.

I thnk women are buying at the peak of a bubble because of the 'panic' effect - they want to buy before the prices go up even more, and they are not inclined to be cool-headed and wait things out, due tot he real estate propaganda effect - and another study suggests women are more concerned about getting a home of their own than men. So this is the other recognised feeder into inflation, other than rampant speculation and exploitation - legitimate concerns to put a roof over your head with some social security... your fear feeds their greed feeds your fear feeds their greed... until the credit runs out...

FormerAptBroker,

I don't know about currently, but at least a few years ago I know subordination letters were contestable in court. I had a friend who was able to keep his 2-year lease in San Mateo in tact back in 1998 despite having signed such a subordination letter. He had his lawyer send some letters and do some court stuff and the judge assigned the lease to the new title holder (to the horror of the new owners, apparently).

...and it was a foreclosure (I don't know about bankruptcy)

I thnk women are buying at the peak of a bubble because of the ‘panic’ effect - they want to buy before the prices go up even more, and they are not inclined to be cool-headed and wait things out, due tot he real estate propaganda effect - and another study suggests women are more concerned about getting a home of their own than men.

Men are not any better.

your fear feeds their greed feeds your fear feeds their greed…

Exactly. Reflexivity.

I just did some quick research and found that in some jurisdictions the lessor must provide adequate insurance or remedy to the lessee in the case of execution of a subordination clause. It seems this is a legislative in nature, so it would vary by location. Some jurisdictions also have established case law providing mandatory grace periods be granted to lessees, despite whatever they have agreed to in a subordination letter.

This is hazardous territory. My suggestion to renters is refuse to sign any such documents and keep looking. Also, a new owner cannot force such an amendment to an existing lessee. In some jurisdictions, they also cannot impose such amendments as contingencies to renewals of leases for established renters. (By the way, this stuff seems to be the strongest in the least likely of places. I found some case law in Indiana and Florida which had pretty tough renter protections, but again IANAL)

Is specuvestor in the glossary?

It's probably been mentioned before, but the real beneficiaries of the boom are not only specuvestors and baby boomers who timed the market, but all the people on % commissions who have seen their gross and net earnings rise and rise - the lenders, the realtors, the mortgage brokers, etc. Do you think they ever want the party to end? Do you think they'd even be prepared to lie to people to keep it going? While everyone else works for a crummy fixed wage indexed to CPI, their 3% keeps ballooning and ballooning without revision or scrutiny... No-one ever revises it down, and bank interest is certainly not adjustable in the world of international credit...

Real estate agents love booms, and they also love foreclosures when the bubble bursts - even more sales and commissions - so do you think they care?

Shameless plug (my apologies), but it does relate to the education and global competitiveness sub-discussions that come up in almost every thread here: Do We Need Another New Math?

Do We Need Another New Math? Indeed we do.

US VENTURE/CRONY CAPITALISM:
You have two cows.
You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows. The milk rights of the six cows are transferred via an intermediary to a Cayman Island company secretly owned by the majority shareholder who sells the rights to all seven cows back to your listed company. The annual report says the company owns eight cows, with an option on one more. Sell one cow to buy a new president of the United States, leaving you with nine cows. No balance sheet provided with the release. The public buys your bull.

Like many of us, I come to this site for sanity. Lately I can't even walk my dog without the neighborhood realt-whore smiling that inane smile and proclaiming" Our neighborhood is BOOMING!!" I come home with a sick feeling in my stomach and log on.
Perhaps it IS because I'm a woman that I want to own a home again so badly. I love to redesign, venetian plaster, add on, landscape, etc. Owning a home IS emotional because, for me, it means I can put down roots. But I am also careful with my Hahas...so I have to wait for this damn bubble to POP.
Waiting for the correction/crash has been very depressing for me. Patience is the name of the game...but in my part of town...things haven't shifted down yet. Houses sit much longer...but eventually some idiot comes along and buys. There is very little inventory...only the ugly,unconsumed leftovers.
When the trolls come to this site, I try not to repond...they only want to incite a reaction. I thank the regulars, especially Randy H., for your honest,intelligent, informative badinage. Sometimes the topics meander and we discuss our families or other investments.
If this bubble really is nationwide or worldwide...then I do question what will happen in the big picture. Things have been difficult for me lately as patience is not my forte'.

A nicely decorated home with Ethan Allen furniture to a woman is a Ferrari to a guy. Just accept the way it is. We as men need our trophy wives, and our trophy wives need their trophy homes. Case closed, next question please.

ALERT: All of us should watch the immigration reform very closely.

It seems that competing bills all have some features to significantly increase employment-based immigration quota.

I do not know whether illegal immigrants will be legalized in the end, it does not matter to the housing bubble anyway. However, an influx of skilled high-tech workers WILL change the picture considerably.

Globalization cannot be stopped. We can only react to it. If the changes become law by 2007, we may just have enough people to cushion the expected massive ARM reset.

Now, no flames please.

Linda,

I can totally understand your frustration. I have been fighting to be patient too. I have kids, and would prefer to have a home before it's time for them to move out. Seems like time is running out for me. Then, there is always the self-doubt about the decision to wait. What if ... ?

I try to then take the cold logical approach. What is the goal here ? Apart from providing a house, I also have the responsibility to save for kids' college education, and my retirement. If I give my hard earned money as downpayment to someone, and then pay huge monthly installments, I have taken care of sellers' retirement, and his/her kids' education. What about mine ? Someone else need to come around 10 - 15 - 20 years from now, willing to pay me enough appreciation to achieve my goals. That's a BIG risk. If I buy, I am essentially hoping that someone would bail me out.

No thanks. I would rather keep saving for my retirement and kids' education. I rent a nice apartment, in probably the best school district in Bay Area - elem and middle. I don't need to move for many many years. What I cannot give to my kids in terms of house, I try to make up for it by vacations etc.

I also calculated one more thing. If I had bought in 2003, what my net worth would be 2 years from now, ASSUMING prices don't increase or decrease at all from what they are today. The only increase in my net worth would have come from gain in the house price. Almost all the income would have been spent in PITI, plus maintenance. Since I did not, it will take me a couple of years more, to get my net worth there. And it won't be on paper, it will be hard cash and some stocks. So the only risk is prices continuing to increase at 10%+ per year, which EVEN the NAR does not expect.

So I am far more relaxed now that I was a few months ago. Hope this helps.

Peter P said :

Globalization cannot be stopped. We can only react to it. If the changes become law by 2007, we may just have enough people to cushion the expected massive ARM reset.

I am not sure I understand. Are you saying, the new immigrants would be able to buy at these prices ???? If that's what you mean, it does not seem likely at all. Even hitech workers, in early years, cannot buy homes without fancy mortgage.

Let me say this first, as a minority American, I am not pissed or furious about Shmend or sunnyvale_renter's posts. This sentiment doesn't just exist today, it is a factor that I will need to take into consideration IF we slip into a Great Depression/Great Stagflation in which most Americans will have to a serious step back in terms of quality of life. After all, it is the dire state of Weimar Republic that sent Hitler to his throne.

US is a country of sharpening divide between the haves and have nots. The major difference between America and Latin America is our command of the world's share of resources far exceeds that of our population, so even the have nots can kept on welfare watching cable TV all day. Our situation as a whole will deteriorate, by how much I don't know. Not only the minorities, but everyone who has some asset, money to lose will be subject to the same fear, our peaceful life is based on the civility that is mainly sustained by the wealth of resources we enjoy as a whole. If you take away the resources, you take away the civility. And worse still, it is not just about the absolute supply of resources, it is about *expectation*. We all have a certain expectation of our lifestyle, certain homes, certain cars, etc. People who have been poor all their lives with no exposure to how others lead their lives tend to be much less disgruntled that people who have seen it but cannot have it.

So I know there are other Shmends and Sunnyvale_renters who harbor these thoughts. I don't condemn them for their attitude, they are just reacting to the environment, which is getting more hostile every day for a fringe middle class American, and soon, mainstream middle class American. It is not something one can easily change through education either, because we as human beings all look for culprits for our misfortune, that is just human nature.

For this reason alone, I pray for a sudden, severe crash for America, we don't have the monoculture and homogenous, tightly-knit community as Japan which sustained them through 16 painful years. I am not sure if it will be safe for me to live here if we are heading for a long drawn recession.

New thread: Immigration reform and the housing bubble

SFWoman,

I agree with you. But people do use their house value in their net worth. And just for comparison - how well my money/investment has done - it's a valid criterion. I am just trying to find the answer to the question, "Would I have been better off if I had bought in 2003 ?"

No, it is not about new or old immigrants, it is about the reshuffle of world supply and demand for labor. All labor of similar skills, adjusted for cost of living and certain aritificial barriers like residency eligibility, must come to an equilibrium in terms of price. Unless we Americans as a whole can obtain and demonstrate more superior skillsets across most sectors, our standard of living will converge with those countries we look down upon, as they catch up.

Although I don't think China is on its way to challenge us due to many structural issues, there is one thing about the Chinese, over there, that scares me. The urge to become rich is burning. Most Americans have lost that urge, it is replaced by greed, but not a live-or-die kind of attitude. You go to a bookshop in Shanghai, the place is packed, people squating sitting on the floor trying to gobble down whatever knowledge they can get their hands on. Thank god we have this stupid Chinese government which puts the entire nation behind the Great Firewall, or they will catch up much faster. You go to a public park, there is always an English corner where you see several expats (including myself back then) surrounded by walls and walls of students eager to practice English with you.

They may not be smart by FormerApt's standard, but they are sure hardworking, and extremely driven. They know that their only chance to advance their life is through education, and they are determined to get whatever education to equip themselves. Even if a small percentage of them succeed, that will be a huge absolute number of work force that can make most of us obsolete. I am not talking about the cheap labor on the assembly lines, I am talking about college grads. Another saver for us is, the college programs in China are just a joke, if not, I will be kept awake more at night.

But America needs a good kick in the butt. I will send my kids to China for a summer not to study the language or culture, but to be immersed in the ultra-competitive environment so that they will know their future competitors. They are not to be taken lightly, whether they immigrate here, or they stay there.

astrid,

it should be some kind of antique furniture from Sotheby's auctions, but I never care for furniture so I don't even know which era by which maestro to quote.

All I need is a bed and a desk, everything else is sort of beyond my comperhension.

Excuse me for getting in the middle of your chat, but isn't Club Med for singles? I thought Club Med=dating club on the road, am I wrong?

Owneroc,

That resonates with me ! I think there is one advantage - if any - to be in an over-populated country. You have to be extremely competitive in order to succeed. It starts from kindergarten.

SFWoman,

No, I don't have graphs. BUT ... I know what prices my friends paid. Almost everyone I know, bought in or after 2003.

And now there is Zillow ! It gives you graphs, and zestimates. Use it with a grain of salt. The more important information it gives is sales records !

I have been using ZipReality and Zillow a lot, for a house I like. These houses sold around 600K in 2003, and now the asking price is 850K - 900K.

Thank Al Gore for internet, what would I have done otherwise ?

SFWoman
The rooms are basic because they want you out and about! This time we went to Punta Cana.
FABULOUS>
When I was 11, my parents took me to Club Med in Tahiti...changed my life. Discovered boys, vanilla yoghurt,water skiing, and all things tropical!
BA
Don't look back! If I hadn't sold in Aug. and waited till Feb. I probably could've made 1 whole Haha more! But I can't think that way!! Gotta look forward to the big fall and the variety of choices we'll have then!
I think part of my problem is that one of my hobbies is fixing up the house..you know...adding value. Can't do that with a rental! Especially if I want to buy it in a few years! The first house I ever bought , I had been a long term renter...I'ts actually a good way to get a house. I said...Come on! It's my home! As soon as we closed escrow I turned around and sold it for $50K profit. Boy were my previous landlords pissed!

On Clubmed.com they have the kinds of clubs listed and, yes, some are for singles.

SFWoman,

thanks for the explanation. Ah, I will never let my wife know :-)

Furniture again is a woman thing, I bet most guys are just like me, we can look at a piece of heavily ornated furniture and pretend that we are taken away by its beauty, but in secret cannot think of better things to do except for using it as firewood.

You know what???
I think I AM a JBR>
I wasn't J or B before...but I think I am now.
shit.

athena wrote:

> Women who can afford to buy and happen to be unmarried
> do it for the same reasons anyone buys… because they
> can and they have bought into the emotional bs about
> owning a house. Then again, some of us save and spend
> our haha’s more wisely. criminy, don’t make such general
> statements about women. Choosing not to be married
> doesn’t equate with being alone, and they don’t all have cats.

I was just responding to the post that single women have been a big part of the real estate boom buy pointing out that.

There are a lot more educated single women with good jobs today then 20 years ago.

Most (but not all) of these women planned to marry a nice guy (with a nice house) and have kids.

Most (but not all) women at around 40 start to realize that Prince Charming with the nice home in Pacific Heights (or Ross or Tiburon) is not going to come along and start a family with them.

Most (but not all) single women over 40 that don’t have kids want a cat (or cats) so they are forced to buy because most rentals don’t allow pets…

SFWoman Says:

"In Pac Heights the women slather over overpaying for 18th century French or English or Irish Georgian. All of them are beautiful styles (not all examples are nice though), but can be had for soooo much less than the women pay for it. There seems to be a perverse pride in overpaying for it among some of my friends."

My Uncle was in the Antiques/Estate Furniture/Used Furniture business my entire life and I appreciate quality furniture but I've met women in SF (who are members of the Young Collectors and involved with the Fall Antiques Show) that seem to be just trying to impress people with their furniture (how rare it is, how much it cost etc.) just like they try and impress people with shoes and handbags (how rare they are, and how much they cost etc.)…

There was a saying that a thought goes along the lines of this: a recession is when your friend loses his job and a depression is when you lose your job.

Surfing on the website foreclosure.com in my zip code I saw two friends pop up on the delinquent list. I guess that means, at least for the time being, recession. Weird thing, these folks have lived in their homes for a long time, at least 10 years.