patrick.net

Randy,

you have pegged G's modus operandi perfectly, he's a troll, I would suggest throwing him in the penalty box.

All the ignorant ethnic posturings and made up histories make a mockery of whatever authenticity seeps through on this anonymous board, if you get my drift.

Guys,

propertyshark just started posting loan info on all properties in the Bay Area (previously only on properties in SF).

Man, I maxed out my 15 daily free report right away, had such a great time getting to know how many acquaintances are totally living beyond their means with a $800K-1.2M loan on VARIABLE rate.

Go check it out, this is the best entertainment ever.

I will have to side with MarinaPrime on the fortress area, not a lot of for-sale signs yet. I am a bit disappointed, but for all the areas that I personally care for, the price is still climbing - asking price that is.

However, after checking out propertyshark, I am convinced that when the housing ATM completely stops in these prime fortresses, things will get very very interesting, since I always presumed that these high flyers are just paying 20-40% down locking down a fixed rate, oh no, variable, and the loan amount is way larger than it should be given how much these people make. I am not talking about the extremely financially savvy crowd making multimillion-dollar bonuses, I am talking about $250K households who have to resort to $1M loan on a variable rate buying from 2004-now.

OO said:
However, after checking out propertyshark, I am convinced that when the housing ATM completely stops in these prime fortresses, things will get very very interesting, since I always presumed that these high flyers are just paying 20-40% down locking down a fixed rate, oh no, variable, and the loan amount is way larger than it should be given how much these people make.

Keep one caveat in mind - I logged on to the shark and checked a few properties for which I know the loan data (including my own) - the loan details are outdated because they show the original purchase loan. If the loanowner refinanced to a fixed rate, it does not seem to update that info.

SP

Yeah - PropertyShark was letting me test their Beta for Bay Area over the last couple of weeks, it was quite interesting although a little hard to navigate unless you had an exact address. And of course I used up my free 15 reports very quickly.

Seems a lot in my vicinity are not in too much trouble, but of course, most are long time residents. I should check out some of the houses that sold in the last couple of years and see if that is more illuminating.

Also, I noticed for the rental I'm in the landlord kept transfering the deed to himself and then a trust and then back again, but there was no mortgage information available - anyone got an idea of what he's up to?

@HARM,

Firstly, Karen Cerulo must be a godess! I'm such a believer in the power of "negative thinking" you could say I've dedicated my life to it!

While I am getting the book this weekend (after reading the reviews and excellent Slate article) I fear she will have left out a huge demographic and real contributor. The aviation crowd. We were taught from boot camp on that planes crash. It's part of the game. Every part and piece of that airplane is just waiting there to betray you. To show you that you are messing with the laws of God and only birds were truly meant to fly.

Even with the best design, most highly trained aircrew and a dedicated maintenance team can the best aircraft remain aloft long enough to complete it's mission. Many will be shot down with so much as a "golden bb" while others will crash and burn (except over the water where they just crash).

From DL (as noted earlier) on down this entire bubble was built on the power of wishful thinking, strapping a board to your @ss, closing your eyes and taking the plunge. Although I've recently been forced to buy I want to go on record as saying I would never willingly jump out of a perfectly good airplane! (I was pushed!)

DinOR

@skibum,

I fear sir that you have perhaps rushed to judgment. I don't believe that "DAiryQUeen is CR/FR/TOS/MP at all.

After seeing first hand the awesome power of bear housing blogs and their effect on DL, Marshall Prentice and John Karevoll have launched a "pre-emptive strike" in blogsphere to counter all that "negative thinking".

My evidence? DAiryQUeen=DAtaQUick! :)

OT... but interesting.

www.katu.com Headliner Video-link

Is your Hummer more energy efficient than a Hybrid?

One man thinks so! (What's really weird is the guy is an Oregonian!)

You gotta see it for yourself. :)

@LosGatosRenter,

Firstly, I spent the first 2 years of my life in a lowly rental and "I" turned out "o.k" (for the most part!) Funny I don't remember a thing about the place?

No, seriously... I DO hear ya' and it IS a drag (especially for your wife) but if you've been following the "Chronic" coverage here (and elsewhere) those stats are being seriously challenged! With the supply of ever greater fools being cut off (subprime meltdown) and the skewed median being exposed, patience WILL pay off! :)

I'm excited to move away from California, but we are waiting three years. I'm more concerned about rents at this point. I want to maximize our savings. It seems like rental asking prices are moving up.

Btw, my FB friend sold her condo (for $509k) in MV ($16k under asking), as-is sale. The buyer was a young tech guy with a girlfriend who doesn't work because she is pursuing her masters. I don't know anything about the financing (hoping to find out about that part).

Condos in my building are selling more quickly than in the previous two years. However, according to my numbers SC County inventory is at the highest point since I started tracking it in 2005. San Jose looks pretty soft to me, while the other "prime" areas still look okay (for now).

I’ve been following this website for 2 years hoping prices will drop so I can buy a house. With a child on the way, I’m not sure how much longer I can fend my wife off on a house purchase.

Is that why most people are here?

I propose a tax law change to allow write off of rent for primary residence.

I think deductions (not tax credit) should be feasible. Most renters use standard deductions anyway. The impact on tax revenue should be minimal.

We’ve gotta be close to the point where people just can’t afford to buy these homes around here.

If by "homes" you mean "houses" then you are right. A dual-income young couple should be able to comfortably afford a new-ish 2/2 condo or even a townhouse.

I know you guys hate to hear things like this, but home prices in the neighborhoods I closely track, which is Noe Valley and Forest Hill in San Francisco, are staying firm. I think prices in Noe Valley are even going up, but it is hard to tell for sure, since so many people are buying up older homes, fixing them up, and slapping $2M price tags on the big Noe Valley victorians, that it is hard to tell what an apples to apples comparison would look like. Price per square foot is definitely going up.

I have started looking at East Bay again, only in Claremont and Elmwood (in Berkeley), since "good schools" is now a requirement so my wife is uninterested in Oakland. Berkeley homes prices are staying steady, as far as I can tell and the stuff we are looking at ($1-$1.5M) sells quickly. I have started looking at $1.5-$2M homes, mostly just for kicks, and they seem to sell quickly as well.

On the flip side, home prices in Rockridge are clearly going down. They seem like they are down 20% from the peak now. At one point, homes on both sides of the border were going for about the same price, but now there is clearly a premium on Berkeley homes again.

I am not saying that affordability is not an issue; it is, albeit a secondary one. However, the price/rent ratio is, and has always been, the main problem throughout the bubble period. If rent goes up, prices will not have to "crash" as much.

Los Gatos Renter,

I can empathize with you. Watching this whole real estate/credit cycle unfold can be like watching paint dry. But on the other hand, the rate of change seems to be in-line, if not faster than historical data for previous boom/bust cycles. The big difference is obviously the rapid unwinding of the loose lending standards. You and many others have observational data of people financially maxed out to the hilt in order to get into a home in the Bay Area. Even if they are not serial equity extractors, ARM resets are going to hurt many of them. And this we do know - the data shows that the Bay Area has an extrodinarily high percentage of recent loans as ARMs and/or neg-am and/or no-down and/or no/low doc.

I know you guys hate to hear things like this, but home prices in the neighborhoods I closely track, which is Noe Valley and Forest Hill in San Francisco, are staying firm.

Troll! :) Just kidding.

I do expect SF proper to stay firm. The recent gains in SF property value are arguably more permanent than those in Santa Clara county.

With rising flood waters, people in the lower elevations drown first, while those in the higher elevations are safe at first. In fact, people may run for higher ground, if they can.

The extent of the crash's effect on the "fortress" comes down to just how high the flood waters will rise. The subprime crash was one huge levy break. Alt-A resets will be another. The "rocking and rolling" economy is a big-a$$ sump pump.

I can empathize with you. Watching this whole real estate/credit cycle unfold can be like watching paint dry.

Los Gatos Renter, detachment will help you through this.

Although I’ve recently been forced to buy I want to go on record as saying I would never willingly jump out of a perfectly good airplane! (I was pushed!)

Wait, am I reading this right??? Did DinOR just buy a home? Where did you buy and how much did you pay for it?

I actually expected San Francisco homes to come down 10-20% from the peak. Which they still might do, but I thought it would have happened by now.

The top end obviously has its own laws of Economics, which us mere mortals cannot understand.

Skibum, excellent analogy! :)

With rising flood waters, people in the lower elevations drown first, while those in the higher elevations are safe at first. In fact, people may run for higher ground, if they can.

The unfolding of the housing bubble is much slower than rising flood waters, of course. It is more like global warming. Pirates will save us all.

Which they still might do, but I thought it would have happened by now.

It will happen only after East San Jose has dropped by 50%.

The top end obviously has its own laws of Economics, which us mere mortals cannot understand.

Top-end means 8-digit-homes though.

"big-@ss sump pump"

O.K... now that's more like a FRIDAY at patrick.net! :)

Skibum, you beat me to the punch. Collectively we as a group were so spot on about Sub/Alt I don't feel any burning need to buttress our credibility. From Dec. '06 to present over 66 subprime lenders have gone belly up and yet prices still haven't come down!

I mean isn't that why accident investigators measure the skid marks? (You know the event that u_s_u_a_l_l_y precedes a crash?)

The unfolding of the housing bubble is much slower than rising flood waters, of course. It is more like global warming. Pirates will save us all.

All that means is that many people will be caught off guard and will not know what hit them. We here are all chicken littles to them.

I mean isn’t that why accident investigators measure the skid marks? (You know the event that u_s_u_a_l_l_y precedes a crash?)

The car that rear-ended us produced 8 inches of skid marks.

Los Gatos Renter,

Ok, I can sympathize with your situation as I've seen good friends here crack under spousal "nesting instinct" pressure to buy a bit prematurely, Mrs. DinOR and Mrs. X being prime examples (sorry, guys! ;-) ). However, if you've really been following this blog closely for its entire existence (2 years), then you ought to be able to answer your own questions, buddy.

If this bust more-or-less follows previous busts, then we're looking at an approximately 5-6-year bear market in RE. The historical ratio seems to be approximately 3/5, that is 3 'bust' years for every 5 'boom' years. This boom went from roughly 1997-2006, so there you go. The Credit-Suisse ARM-reset chart also lends strong support this rough timeline. Of course, the Fed/MBS credit bubble really took this one to previously never-before-seen heights (see Shiller chart), so the downside could be longer this time.

We're in Bubble correction year #1. So, at least 5 more to go. As far as renting goes, what's wrong with just renting a detached SFR house, like Randy H or myself? You don't need to be "forced' to live in a crummy apartment next to the 'Projects', y'know. Pick a nice house in a decent neighborhood with good schools, and that ought to satisfy the wife's nesting instinct for a while. Good luck to ya'.

I have started looking at East Bay again, only in Claremont and Elmwood (in Berkeley), since “good schools” is now a requirement so my wife is uninterested in Oakland.

Jimbo,
I guess you must want to be close to College Ave and Rockridge amenities? I am assuming that you know about Berkeley's "choice" lottery for elementary schools. You rank your school choices in your zone, but just because you live in a "good" part of town doesn't mean your kids will go to school there.
Will you be cashing in all your chips from the SF duplex?

Jimbo,

Yeah, I need it right now like a need a "matching" hole in the head but we were set up on a "first right of refusal". I know, bummer huh? We have a wedding in less than 6 weeks and with a mother-in-law visiting all the way from overseas. I couldn't see putting my wife through that.

Now for the math:

We originally offered 180K for the condo here in OR back in APR 2005. Flatly declined but this is a small town so we asked the guy if he would give us FROR if he ever DID want to sell it (feigning interest) to deflect humiliation inflicted by lowball offer. 2 years later (and after about 25K in landscaping) he decided he doesn't want to be a LL anymore so w/o realtors we worked it for 206K.

I'll leave the calc's to those that would even bother with these petty amounts but for me... it was all about principles! So now I'll be paying TWICE the amt. I'd been paying in rent (I know, I know.. ) nothing times nothing still equals nothing but our objective was to bottom feed in '08-'09. We'll still probably do exactly that b/c 3 years ago when these units were being built they couldn't give them away. Afterall, a man moves to Oregon to be a man! Now all of a sudden there's tremendous interest and multiple offers?

Can you say my McMansion is no longer appreciating and I want to take my money off the table!?

"8 inches of skid marks" :(

That is TOTALLY oblivious! At that point I guess you have to glad the schmuck didn't hit the gas? You know, just to see what's on the other side?

Mostly I want to be close to Rockridge BART. I know that Rockridge has a good elementary school (Chabot) but wife refuses to consider it, since our daughter probably could not go to public schools after 5th grade.

I know Berkeley has a lottery, similar to San Francisco, but as far as I can tell all the grade schools in Berkeley are good, so it really doesn't matter. I guess there is the potential hassle of having to schlep your kid across town, but that is going to be true no matter where you live, unless you move right next to a grade school. And then what do you do, move again when your children enter Jr. High?

That is TOTALLY oblivious!

He was driving with a suspended license, his kids were not in child-seats, and he did not even have insurance!

@HARM,

No offense taken. In areas like "Fortress BA" and NYC what we wound up paying would just about cover the realtor's commission and closing costs.

So why get all bent out of shape about this housing bubble thing to begin with, right?

BECAUSE I'M AN @SSHOLE, (alright?) :)

@Peter P,

That's cool. Wasn't his CAR!

Actually, it wasn't cool. But altogether too common. :(

DinOR,

Very true - most of us Clownifornians would leap at the chance to get a decent place for $206K. Hell, I'd take 2. Even the farm-country foreclosures are going for more than that here. I think you can still be well positioned for some bottom-feeding when the time comes, around 2011-2013, so keep the powder dry. Who knows? Maybe we'll all end up going from "rich renters" to "rich landlords", with positive cash-flow properties from day#1.

Well, it sounds like you got a place you wanted at a price you can afford, so that is the important thing.

EBGuy, I forgot to answer your second question: no we want to keep the Noe Valley duplex. This obviously lowers the price range we are looking at, but we might be able to go higher if that is what it takes to get what we want.

We are in no hurry whatsover to move though, since we like where we are and Ava is only 15 months old. I am still hoping prices come down so we can get what we want at the price we want, but I know the real world doesn't always work out like that.

If prices don't move, we plan to say put and enter the SF school lottery and see how that goes. If worse comes to worse, there is always private schools, but we would rather not do that.

@Peter P,

Let me take a wild guess: you got rear-ended by one of those fine, law-abiding "guest workers" that are about to get amnesty?

@HARM,

As always you're more than welcome to move here! (I'm told there's another unit available!) My neighbor HAS HAD IT with specuvestors and stopped by on Thursday to see if I can water for him while in Mexico (Oh!) and could he count on my vote to "grandfather" only existing renters at the next HOA meeting! (Meaning no more flippers/LL's)

No problem dude. :)

@Jimbo,

Thanks! It wasn't really so much a matter of "affordability" as they difference in payment on 180K vice 206K would be about $49 a month but it really was about not feeding the bubble. In ways it worked.

The owner swore on a stack of bibles he would NEVER sell and yet after 2+ years of massive neg. cash flow... he buckled. They had the notion these units would sell for 227K in early 2005! So by now they should sell for, what? 275K? Ahem, (try 206k). 2 years of PITI+HOA's along with countless "special assessments" for improvements will smack the silly right out of a guy, eh?