patrick.net

I hereby invite reasonable RE bulls to this discussion.

I appreciate the airline pilot analogy about maintaining constant vigilance. I can definitely relate to that. I have a mental checklist that I go through everyday and I'm always checking the "gauges". Oh dear! My "Low Beer Warning Indicator" is fully illuminated!

SQT, have you tried chocolate orange peel?

My spicy ramen meter beeps all the time, even after I just had a bowl.

I can guarantee two things:

1) None of us here will have it all exactly right.
2) Very few of us here will have it all exactly wrong.

Back to the actual question posed:

I think bubblehead have actually raised more useful scenarios for the ongoing bubble than the RE-always-goes-up crowd. The latter's arguments typically involve population growth, insufficient land, zoning restrictions, past history, and desirability of X location. Each of those points have been disproved or will be flexible over the long term.

As I see it, there are only two factors that could continue to fuel the bubble and or cause it to rest on its current high plateau.

1. high inflation via government monetary policy
2. price supports via government fiscal policy

So I think government policy is the big X factor. However, if the government pursues a disastrous course of saving the home owner and the RE industrial complex at all cost, the fallout would simply be delayed and the fallout would be even worse.

I can guarantee two things:

1) None of us here will have it all exactly right.
2) Very few of us here will have it all exactly wrong.

You are exactly right!

So I think government policy is the big X factor. However, if the government pursues a disastrous course of saving the home owner and the RE industrial complex at all cost, the fallout would simply be delayed and the fallout would be even worse.

There is much incentive for the fallout to the delayed.

I haven’t. But it must be good since you brought it up.

I love it even though I do not have a sweet tooth. Try it.

I see red-flag warnings all over the country that the Bubble is already in the early stages of deflating: inventory at 200-300% above typical levels in FL, AZ, NE, sales dropping off, etc. With the exception of SD & SAC areas, CA is lagging much of the rest of the country in this regard. In the DQ parlance, we haven't seen very many unmistakable signs of market distress here --YET.

Let's also remember that a RE bubble --unlike most equity bubbles-- is very sticky and UN-liquid. It takes years to pump it up and years to fully deflate. Bear capitulation is always the last phase of bubble's peak and a sure sign of its impending collapse. Let's not all throw in the towel just yet.

With the exception of SD & SAC areas, CA is lagging much of the rest of the country in this regard. In the DQ parlance, we haven’t seen very many unmistakable signs of market distress here –YET.

Let me put on my bullhorn hat...

The correction in the BA was milder than the rest last time around due to rising rent and improving fundamentals. This may repeat this time.

The economic climate here is quite difficult to judge. There are massive hirings and firings going on. As I have said before, BA is in constant flux. This may not help job security or ability for individual homeowners to repay his mortgage, but there will be new blood to buy in.

3 families living in a 3 bedroom 2 bath house.

How about a 3 bedroom 6.5 bath house?

"this guy is a dentist and seriously beyond stupid"

With all due respect to brillant and clear headed doctors out there, it does seem like doctors as a collective group make the dumbest investment decisions.

I can guarantee one thing:

1) More money will be useful in all scenarios (even Civil War).

Back to to the wheel I go...

Of course money will be useful! Esp. pennies and dimes, get them before the US government debases them further.

...but there will be new blood to buy in.

Almost every week I see multiple out-of-state license plates while going to or from work. Last week I saw Washington, D.C, Illinois, and Texas. My commute is only 4 miles. This place has the jobs. But big layoffs are coming for Sun and Maxtor this Summer.

Last Christmas, my uncle back in PA told me I was smart to move here. He said there aren't any jobs where he is.

So if the jobs disappear, this area is going to be in real trouble. But unless that happens, demand for housing will still be high. That is the critical factor for a real downturn in the Bay Area.

I remember thinking that prices had to come down back in 1994 when I was making 25% of my current salary. I wish I had stretched myself into a house back then. Because now a mortgage for $225K (Albany/Berkeley in '95) would be easier than my monthly grocery bill.

Almost every week I see multiple out-of-state license plates while going to or from work. Last week I saw Washington, D.C, Illinois, and Texas. My commute is only 4 miles. This place has the jobs. But big layoffs are coming for Sun and Maxtor this Summer.

I notice that too. We must be vigilant.

Again, to succeed, one must (in order of importance):

1) be born in the right place at the right time
2) be in the right place and at right time
3) do the right thing at the right time

I am aiming for #3.

Hint: #2 is easier and is more effective.

“90% of success is showing up.” -Woody Allen

Yes, 90% of success is showing up in the delivery room at the right time.

Bikes2work,
I think there exsists migration on both ends, but probably more going out than in. In fact, the last 3 years have shown a seepage of people leaving California. On the other hand, a friend of mine in South Carolina says that everytime he goes to the grocery store, he sees 5 or 6 California and New York plates more " assholes" as he calls them. Seems like every other person I know here has plans to leave at anytime.

Yeah, what a lousy time to be a young adult in 2006.

Huh? Being "born right" is 100% astrological. It is a karmic gift.

We must pass thru the 6th of June first.

Perhaps 06/06/06 is a great day to buy a house. Just kidding!

Happiness is relative in the context of social class and background.

“It was the best of times, it was the worst of times,…” Dickens A Tale of Two Cities

My favorite.

No generation is without merit or flaw.

Very true. Humanity is full of flaws.

Re: being born right

We should all be grateful. If you have the luck, use it to help people. If you do not, try to improve it by helping people.

But I do not pick up hitchhikers.

I do not do that either. Isn't it illegal to pick up hitchhikers?

Gas is at $2.75, so people are not as onery as they were.

I am so jealous. I paid $3.7 the other day.

Did you mention clambakes? :-P

I'm waiting for the first (or maybe the second) coming of the Church of Oprahism.

My apartment complex is 0 miles to a bar. The problem is: I do not drink.

Newsfreak,
If you ate that much shellfish all the time, you'd be dead in 10 years or less due to the huge amount of mercury in your system... either that or you'd set the metal detectors off at the airport.

For some reason I always wanted to have enough $ to endlessly eat clams.
Stuffed clams, steamed clams, corn-on-the-cob, and sand and sea.

I love:

Raw clams (cherrystone and little neck)
Steam clams (in white wine or sake)

Try using clam juice (from steaming clams with wine) to cook seabass or cod.

Besides, I would rather be a mayor of my own town, than start a religion.

Are you serious about starting a religion?

Peter P and newsfreak,

Sorry, it was mostly a futurama joke. In the 31st Century, Oprahism is a major religion. :oops:

Though when I was a teenager, I really did want to start my own cult. Someone once said that I'd make a good cult leader.

doddler,

Oh I don’t know - East Bay Area (Ala & CC counties) are at about X 3 of inventory compared to last year at this time. But I don’t know what the “typical” inventory should be - we haven’t has a “typical” real estate year here since about 1996.

If 1996 is the benchmark, then this typical house-on-house comparison for my old next-door neighbor's home in Redwood City, who bought same time as I did (RWC is a great example because it is not more desirable today, nor have the schools improved):

$ 316K Nominal in 1996
$ 720K Nominal in 2002
$1,099K Nominal in 2005 (March)
$1,189K Nominal in 2005 (Aug) {a flip}
$1,345K Nominal current Zillow estimate

Those deflated figures would be:

$ 370K (1996 in 2006 dollars)
$ 761K (2002 in 2006 dollars)
$1,132K (Q12005 in 2006 dollars)
$1,203K (Q32005 in 2006 dollars)
$1,345K (2006 dollars)

That's only a 264% real-price appreciation. If that's "typical" then I wonder what would qualify as a bubble. 10,000% real return over 10 years? But, you could be right; that's the point of this thread. Anything is possible.

Though when I was a teenager, I really did want to start my own cult. Someone once said that I’d make a good cult leader.

Really? Someone said that to me too! Perhaps we should form a partnership.

"Really? Someone said that to me too! Perhaps we should form a partnership."

Sounds great! I'm working on incorporating MMOG features into the revenue to facilitate communication, revenue collection, and recruitment.

- revenue
+ religion

Freudian (or maybe Smithian) slip :oops:

Economic recessions are a great time for cult-recruiting.