patrick.net

If you think that you can save up $60K in the next 3-5 years, then you probably should hold off. I don’t know about Ventura, but this is just the beginning of the housing bust. It will go much deeper than people expect because when a bubble of this scale deflates, the market will tend to overreact the other way. It doesn’t sound like you and Mrs. X are the quality-of-life buffs who demand a nice home so that she can do some interior deco.

However, the upside of getting in right now is, in the worst scenario, you put nothing down, and can always walk under anti-deficiency protection, while saving some tax in the mean time.

Mr-X,

OO offers some good avice here, and I would add the following:

Low cost basis (price) & strict lending standards generally benefits the borrower far more than high cost basis & easy money.

Why?:
1. You can always refinance your interest rate, but never the principal.
2. Price largely determines your nondeductible property tax & insurance, and of course lower = better.
3. Much less competition --especially from mouth-breathing Howmuchamonth 'tards and Serin clones.

2. Price largely determines your nondeductible property tax & insurance, and of course lower = better.

I thought insurance was based on replacement cost, which is tied to some estimate of current labor cost of $ per square foot to build.

Am I mistaken?

eburbed,

I didn't distinguish between PMI & homeowners insurance here, so you have a point on H.I.

Homeowners insurance usually comes in two flavors: ACV (Actual Cash Value) or Full Replacement Cost. ACV is basically FRC minus wear 'n 'tear & depreciation, so technically, yes, you are correct.

However, one of interesting by-products of the housing bubble has been that the price of labor and raw materials has ALSO skyrocketed. So in that sense, holding off for a while might still benefit you on insurance.

Actually I am not surprised at X's capitulation.

At the risk of offending Mr. X, just speaking from a psychological point of view, "'d say those who express the most aggressive, flamboyant and emotional attitude AGAINST something may actually be the most prone to fall for exactly the same thing. The aggression is just his way of resistance, because deep down inside he is tempted.

Those who are the least likely to capitulate are those who actually don't desire it so much, so price will be the main driver in their decision, not the house itself (which is more about emotion than function). That's why I think a professional like FAB is much less likely to capitulate than end-users like most of us.

HARM,

I expect the building materials to tank big time in by 2009. The inflation of building materials is mainly driven by China, which is in a frenetic building pace wherever you look, the whole China is a huge construction site that dwarfs the building scale of the US in every single way.

However, building activity will be over by 2008 after the Chinese come-out party. But the materials industry takes time to ramp up and wind down, so there will still be a glut of inventory coming out of the system with NO buyers on the other end.

We will be able to pick up some really premium building materials 30 cents on a dollar in 2009.

I'm not planning to capitulate any time soon, no pets and no plan for kids. Want to do a lot of traveling in the next five years. I would like to pick up a nice property to build or a retirement home for my parents though.

Ok, ok. To be fair, if Mr-X got 1997 price + inflation (see his early posts above), then it wouldn't be right to call it "capitulation". He just got a fair price a lot earlier than the rest of us, and kudos to him.

Actually, I'm surprised it happened in mighty Ventura County (aka "Cote Country"), as they have some of the nastiest, pro-Boomer NIMBY anti-development policies imaginable in SCAL. I think it will be *quite* some time before I see any deals close to that in my neck of the woods (Pasadena/San Gabriel Valley), unless I hit the Housing Lotto and find myself an extremely motivated seller with tons of equity.

OO,

My mom just came back from China and she said the high finishes are pretty amazing. Seamless stone for walls, high end stereo equipment (everybody in China seems to be obsessed with high end stereo equipment), marble or teak flooring everywhere.

If that market goes down, gorgeous stone bathrooms for everybody.

high finish = high end finish

If that market goes down, gorgeous stone bathrooms for everybody.

Cool. :)

HARM,

how did San Gabriel valley did in the last downturn? Did it go down much compared to other SCAL neighborhoods?

High end stereo equipment is an obsession of people of a certain (economic and cultural) background.

It is just a way to spend 200K+ on something for show in the living/audio room.

I kept my stereo (a pretty decent one) from 14 years ago.

I am too cheap to get an iPod. I listen to music from the computer CD-ROM drive.

OO,

Actually, I can't really say a whole lot from personal experience, as I was a pup at the time and not in the market (recent college grad). However, I can recall reading a CEPR paper (Dean Baker) that estimated L.A. County prices dipped about 20% in nominal terms, and maybe 35% in real terms during the mid-90s. Don't have the link, but maybe you can still find it on their site.

I distinctly remember the SGV was not immune, however. My mom passed away in '95, and I recall the family could not sell her South Pasadena condo because it had lost so much value from when she bought it (1991), it wiped out her equity and then some. And that was before $0-down, interest-only & neg-am loans.

GC,

Well, at least he's not a Chinese grad student from Shanghai, as initially reported.

The Mainland Chinese upper middle class people I know obsess over high end AV equipment the way American hausfraus obsess over granite countertops.

if Mr-X got 1997 price + inflation

El HARM-O, exactly what I offered and so far it's accepted. We'll see though. I put a pen on the 10-year Ventura graph on Zillow and offered that. plus closing costs.

Huh?

Huh?

Huh?

If you want to insult me or my family/friends, please be a little more clear about it, so my hopelessly petite bourgeoisie brain can receive the insult in the proper spirit.

GC Says:

> High end stereo equipment is an obsession of people
> of a certain (economic and cultural) background.
> Whenever you see expensive Hi-Fi, you can immediately
> tell something about the owner.

I have not noticed any pattern in the economic or cultural background of audiophiles (other than they are all men). I’m sure that more people at a Symphony Patrons Dinner (or even a Symphonix dinner) have high end audio than the general public, but I know a lot of poor uneducated people (including some tenants) that have impressive home (and car) sound systems…

P.S. I have a Sony stereo that I bought for

Honestly, I want to know what kind of parents he has after reading about this killer Cho. His parents are clearly at fault, to say the least, they are negligent. Their son was so obviously, seriously disturbed, they should have sent him to a mental institute.

GC,

It's forgiven. I thought you were doubting the upper middle class status of my Chinese connections or making some veiled comment about their arriviste status...the latter is true enough.

I don't think very highly of their equipment or musical taste (Chinese pop music and pirated Celine Dion/Yanni is my idea of hell), and most of the equipment seems to collect dust (I have an uncle who has a US$10K set but never use it because he think it uses too much electricity). My little Klipsch iFi is good enough for me.

I think Randy is going to buy soon because of QOL considerations.

I would be very happy to buy soon. But chances are growing that we may be moving back to the Peninsula eventually. So during the interim, which may take a while, we're in a must rent situation anyway. Even if we end up $0 even for having rented after all this ends, we'll be ahead by not having any hindrances to moving or buying when time comes to bid adieu to Marin.

The Mainland Chinese upper middle class people I know obsess over high end AV equipment the way American hausfraus obsess over granite countertops.

well that's all just to do with the evils of communism, just ask SP. the connection is just palpable...

> High end stereo equipment is an obsession of people
> of a certain (economic and cultural) background.

I worked in a hi-end shop ...Cupertino mid 80s
we had mainly single engineers, white who were true
analog fans. They hated CD players... loved their LPs
Sometimes we had women in the shop... "Does it come in
different colors"...

We sold lots of American products..still out there.
CounterPoint Threshold, Vandersteen SOTA TT
Stax Theils Spica Apagee Infinity Martin Logan
Oh the list goes on...

DS,

Ugh, yes. Certainly Communism as it was and is practiced in China. The 1960s broke our idealism and severed us from our cultured past. The 1980s and 1990s introduced crass materialism. The Chinese were always a somewhat callous race, but the Cultural Revolution destroyed our sense of social responsibility and morality. Reacquiring these sensibilities will take much more time.

I would say we had few Asian in our shop around 10%.
Many were around 35-40...

astrid Says:
The 1960s broke our idealism and severed us from our cultured past. The 1980s and 1990s introduced crass materialism.

hmm, that seems to follow the crass materialism of the West of the 80s and 90s!

Headset Says:
"Savers now get the chance to be evil.
I’m going to lowball big time, and of course be turned down.
Then when the house is still unsold months later, I will get a call seeing if I’m still interested.
Then I knock another 20% off the price and do the “evil dance”
It will be the revenge of the “too stupid to take advantage of leverage” crowd. "

OO addressed the main response I would have which is that it won't be any easier to buy in the future, just that there will be more deals. Money is going to tighten up. There will be plenty of it, but you will need a real downpayment, so start planning for it.

Next thing and I have said this before. To aimlessly lowball is stupid, even if you are successful how would you know if you really got a deal. I really must assert that you will do better when you understand what makes a house worth something, understand the fundamentals, and then negotiate with confidence. You can play the lowball game, or you can just sit back and wait. I'd rather sit back and not look interested until prices are REAL bargains.

I also intentionally compared the Chinese AV preference to the American granite countertop preference. It's 90%+ about perceived status, not too much about practicality or true appreciation for its beauty.

I have a medium-end Panasonic stereo (integrated, of course), but at least it has 5.1 surround sound built in. Wait, that's because I was too cheap to get a separate theatre unit...

My brother has bought all Panasonic gear just so that the remotes interoperate! Or maybe it was just coincidence...

GC Says:
April 17th, 2007 at 6:50 pm
"Is it true that every bespectacled asian man with a pair of bewildered eyes and a sullen face is a suspect now? "

I don't knwo if you are Asian but I'm a white guy, and I can tell you that this incident won't reflect on Asians. I figured it's about time for an Asian to go postal, they never cause any trouble.

Malc,
Inventory will increase new and used. Im betting on great choices with
no 'multiple bids' heard from sellers.

Space Ace Says:

> High end stereo equipment is an obsession of people
> of a certain (economic and cultural) background.

I worked in a hi-end shop …Cupertino mid 80s
we had mainly single engineers, white who were true
analog fans. They hated CD players… loved their LPs
Sometimes we had women in the shop… “Does it come in
different colors”…

We sold lots of American products..still out there.
CounterPoint Threshold, Vandersteen SOTA TT
Stax Theils Spica Apagee Infinity Martin Logan
Oh the list goes on…
_____

Space Ace, good memories!

I remember those names. Vandersteens were the sh-t. How about Paradigm, Mirage, B&O, Klipsch, Norman Labs, Carver was doing some speakers, also.

I created anti-vibration products: one during the early nineties, that was featured in the New Products section of the now defunct Stereo Review Magazine, and one a few years ago featured in Sound and Vision Magazine.

I picked up a nice, used SAE A502 200 wpc amp and an Adcom GFP 565 preamp for about $65.00 FOR BOTH. Great sound.

I just snagged some Klispch KG4's, circa late '80s for $180 a pair. I use them to play drums along to because they're so efficient and crank pretty loud!

There are few true high end shops out there, sorround sound was around for some time.
but true high end will provide better imaging of sound. The mass marketing of gear
is sad. You can try the Audible Difference in Palo Alto or Century Stereo in San Jose...
Last time i been there was about 3 years ago. We had far more HE shops back in the 80s.

Malcolm,

Hmm, a little too ignored if you ask me. A Chinese grad student went postal a couple years ago and offed a couple of his professors. Never heard a peep about it in the mainstream media.

Michael Holliday, yes i too recall those ... good pick my man. SAE/Adcom for $65
Oh man ... thats sweet...

Jon, OO

It's to be expected in a group like this that there will be a strong resistance to anyone "defecting", no matter how much sense it might make for their personal situation. The very choice of the word "capitulation" tells me more about the speaker's biases than the object of that term. I would hope that each and every person here would ultimately make a decision to buy or not to buy entirely independent of any cheering or cajoling from Patrick.net'ers.

OO, the trouble with using other people as measuring sticks -- especially people you don't actually know personally and intimately -- is you know very little about what is driving their personal utility. As far as we know, FAB is single, wealthy, and very self confident and secure. His utility will be different from Surfer -X' is from DinORs is from mine. Maybe you think you're most like FAB, so that works for you. But how will you know if his situation changes? Maybe he won't tell us if he gets married or decides to buy a home in Monaco so he can walk to the Grand Prix and elects to never buy a primary residence here. In the long run, FAB has his decisions to live with, you yours and me mine. Just go a bit lighter on "capitulation" talk. It assumes that everyone else has the same needs and wants as you.

astrid,

Who was the famous Chinese poet who was purged during the CR and then rehabilitated just before his death? I can't put the name together.....any idea?

His son is a noted artist in China and recently built a tribute to his father....

I'm having a brain cramp...

Best thing for brushing cats - a pair of rubber gloves and a little bit of water to wet them...
Don rubber gloves
Stroke cat
Watch the unholy amount of fur collect on them.
Rinse and repeat.

My last cat was, I suspect, largely composed of compacted cat hair.

Being an Exotic Shorthair (half Persian, half Domestic Shorthair), she got the fluffiiness gene from her Persian ancestors.
Despite never weighing more than 7 pounds, one brushing session could yield as much as half a paper grocery bag of fur.
Sadly, she went to to great hunting ground in the sky last november, at the ripe age of 18. If I'd had my wits about me, I should have carded and spun her fur - and made about 15 sweaters out of it.

RE: Becky Troutt and insulting lowballs - don't know if any of you caught the "lowball offers are increasingly common" thread over on Ben's blog, but one poster - Kevin - has it down to a fine art.
I'll quote it in full, 'cos its a scream:

Comment by Kevin
2007-04-16 13:05:49
In the Baltimore Housing Bubble, sellers are having a hard time understanding that their houses are not worth as much as they are trying to sell them for. What I like to do to fuel the soon coming onslaught of decline is to go to open houses and offer 50% of their asking prices. I know this seems cruel and unusually, but when the seller and their agents jaws drop, I simply point to the price on their open house flier and I drop my jaw too. Then I point to their hanging 60 inch plasma TV and I say, “My price also includes you throwing in that TV.” This is point that I usually get thrown out.

-Kevin