patrick.net

I see. And it might not be prudent to get a second home (condo?) in North Valley.

Not at these prices, no. I'd rather have a second home/condo somewhere like Carmel or Incline Village.

"I was playing on words: I’m a fundamental-ist, as in I believe in economic fundamentals."

LOL! In that case, I wish everybody is a fundamental-ist.

I'm almost scared to bring this up, since it involves prop 13, but here goes. Assuming the likely scenario that the federal government succeeds in inflating itself out of trouble, I assume Californian municipalities will run into the tax raising ceiling and be starved for revenues. Anybody care to comment?

They had the usual, suicide loans, etc. but the tip to pool resources with friends was a new one.

Not a totally new concept. Around 1997, a surveyor that I worked with explained to me how he bought his first house in Concord (suburban hell on par with Aurora, CO). He partnered with a contractor friend and eventually was able to buy his share at a pre-agreed price. His friend even helped improve the place. This all came about after the '89 RE crash. The contractor was just looking for a predictable return, while housing prices were stagnant and dropping.

Your income typically does increase over time (if you avoid divorce, anyway). My household income increased 462% since 1994. And there are still opportunities for advancement. My boss is planning to retire in 8 years, and right now I'm the only one who could replace him.

Californian municipalities will run into the tax raising ceiling and be starved for revenues

If super inflation happens, the Cities will see just the opposite. Due to Prop 13, they get less than 12 cents on the dollar from property tax. Schools and the state waste the rest. Their primary funding source now is sales tax. That is why they let the big box stores happen and shunned new housing.

Public schools are mostly funded by tax from merchants. That is why Los Altos and Los Altos Hills, although inundated with high-value properties and high assessed property values due to recent change of hands, have a trouble funding their high schools, because Los Altos has very little commercial activities. But it is also a collective choice made by the residents, most of whom choose to send their kids to private schools anyhow.

bikes2work and OO,

That's really interesting info indeed. Thanks!

most of whom choose to send their kids to private schools anyhow
However, on the elementary school level, Los Altos schools are better than Palo Alto's. They all scored highest (10 out of 10) in the state on recent standardized tests. Better overall consistency that Palo Alto's elementaries.

LA elementary district includes a small portion of Los Altos Hills, Mountain View and Palo Alto that encompasses the San Antonio Shopping Center. Sears and leaving next year and the report is that Home Depot is moving in. On the High School level, it is not revenue but the mixing with the rest of Mountain View that brings the quality down. Too many apartments in the rest of Mountain View. I'm a snob about that. Sorry.

I remember when the phrase, " sticking your neck out", used to mean, going into debt. As a symbolic meaning, this meant that; you could have your head cut off if you can not repay the loan. In todays society, this analogy has no meaning.

If we visualize the current flock of debtors, perhaps we can restore the meaning to this phrase. Imagine all the debtors with their necks sticking out. Now transpose that image onto a flock of millions of chickens on the way to the precessing plant. What happens next? We all know what happens next. This is why, going into debt was always a cautionary step.

I am from the old school of debt, and that is why I see a monetary bloodbath in our future.

bikes2work Says:

> On the High School level, it is not revenue
> but the mixing with the rest of Mountain
> View that brings the quality down. Too many
> apartments in the rest of Mountain View. I’m
> a snob about that. Sorry.

It is not snobbery, it's just a fact that most (but not all) people that are living in crappy apartments with High School age kids are not very smart. Most (but not all) kids raised by people who are not very smart are not good students. The Los Altos Hills kids will hang with the Mountain View apartment kids in High School since many single Dad's work two jobs and the empty apartment is a great place to party and many single Mom's date guys who will sell High School kids drugs. After High School the Los Altos Hills kids will only see their old friends if they grab a burger on El Camino and are asked "would you like fries with that"...

Brand new homes being sold to investors as welfare rentals MUST be outlawed.

Absolutely. If we take away NIMBYism, free market will create enough low income housing. Subsidizing housing will only make it more expensive over time.

NIMBYism won't end. The existing home owners don't want younger, more accomplished middle class families crowding them out and lower their property value. They want to be rich as possible and have the government subsidize them (via subsidized housing, food stamps, and Earned Income Tax Credit) for their gardeners, cooks, gas station attendants, etc.

They're not going to concede until the whole deck of cards comes crashing down and California becomes such a mess that no sane middle class family (without the means to segregate themselves via gated communities and private schools) will pay the Boomers for their houses.

Maybe it's too much pessimism, but right now Red Whine's fine screed actually makes a lot of sense.

So many good posts!

Lefantome, (aka) "The Man" puts things in true perspective! I suppose I've always been a "bottom feeder" as I have the falling knive scars to prove it. Lefantome dispells the notion of hoping for a reflex rally and short term profitablity. Can someone (Robert Cote') anyone? coin a phrase that best describes the Titanic's "up-grade" passengers?

astrid,

I have my own "gated community!" It's called "Your Break". There are 5 pool tables, a juke box and a bar that is a block deep. The checkerboard tiled "dance floor" has an unmistakable traffic pattern that leads from the gracious enty to the bar and has a similar foot traffic pattern to the men's room that exudes the scent of......... mint. There are two old farmers that play video poker and to my knowledge have never spoken. Frankly, I don't see how the place stays open! Until their lease runs out anyway, I have my own "gated community!"

SP,

Oh Elite One,

Sorry to hear of your dissapointing dinner! You can join me in my "gated community" where I hear the Friday $7.95 buffet is quite excellent!

SP,

Good news! Maybe I could even afford to pick one up in a couple years, for a 50+% discount. Maybe even more if these places boast of "dated" items like fake stucco, granite countertops, and fakey wall finish. And yeah, pricy bad restaurants. ;)

Actually, I probably wouldn't buy anything built in the last 6 years. I just wouldn't trust the construction quality. But what you mentioned is indeed a hopeful trend towards better planned communities.

SP,

Sounds like Cicero Illinois!

Just musical fucking chairs, right now the music has stopped but they lights haven't been clicked on so everyone can see how ugly everyone else is. No mystery here, just the decimation of the middle class, transfer of wealth etc etc. Sorry assholes but there is nothing mysterious 'bout the housing market, no your fucking 3/2 50's rancher in Redwood City isn't worth 1.2mil, it isn't worth 950K. Your path to riches isn't paved with a NAAVLP loan. Huge fraud everywhere, and asshole greedy fucks lapping it up. Didn't you shitheads get enough of this with the dot.com bullshit? Seems the Japs are pulling their funds, what happens when our friends the Chinese do the same?

Inflation is fucking out of control, take a look at what it costs to fly anywhere.

The marginal utility of being right about a housing bubble dwarfs any potential benefit for going the other way.

This ignores the value of Theta. The longer one needs to wait to "be right", the less utility they receive from their position. After all, what you're describing reduces to a real-options scenario on a personal level. Again, this is a collision of macro and micro perspectives.

I agree with you when evaluating things from the top down. I am ambivalent about it when evaluating things from the bottom up. Some people are, could, or will receive more utility from buying rather than waiting. Some have simply deceived themselves of the same. It all depends upon how much you value your personal real-options.

Robert Cote,

I agree with most of what you said but I'm not sure being wrong about housing is merely a zero cost proposition. Not just at a microeconomic level, but with a whole class of people who just totally missed out.

For example, in Shanghai, RE in 1996 or 1997 (when my parents bought their flat) was probably 10X the annual income of their owners. This was high enough that a lot of people hesitated or did not upgrade in time. Those same flats have gone up 3-10X since while wages have less than doubled. The worst part is that there is only a tiny rental market in the city, targeted at migrant workers (ghetto low end) and foreign ex-pats (extreme high end).

People who didn't buy in on time are now stuck in a very difficult position. Nobody in Shanghai would move to a cheaper city. So they're stuck with either living in their current unsatisfactory housing (often crumbling one room apartments) or move into extreme suburbs and spend 3+ hour commutes everyday. Renting up close isn't even an option.

I don't think this scenario would quite play out in the US, but it seems like a lot of people think so. Some people have been brainwashed into believing that they must buy middle class SFH in certain communities, or must buy some home, in order to climb onto the home owning ladder and not be utter failures.

Unfortunately, these guys are likely to find themselves in the same boat as the poor late Eighties Japanese buyer, stuck in an undesireable situation and unable to get out. The only positive for them is that even with the new bankruptcy laws, bankruptcy here continues to be much more socially acceptable out than bankruptcy in Japan.

CC,

Can you come up with something that hasn't been analyzed and debunked hundreds of times already? I welcome counter indicators to the RE bubble, but new stuff, please!

I went to visit a friend yesterday at a new development around Silvercreek area (south of Evergreen) yesterday.

The last time I was there was perhaps 7 years ago, it was truly amazing that once you drove through this little hill, suddenly rows and rows of new homes open up right in front of you stretching all the way to the horizon. Most of them have a decent lot, 12000sf or so, but even more decent is the size of the homes (4000-5000sf). There are also some smaller homes closely packed together for lower price points. The developments there seem to be quite fully occupied.

But this is not what I want to talk about. I want to talk about the vast office space that is left VACANT just below the Evergreen foothill. I first took a wrong turn and ended up in the industrial park right below, the buildings are about 80% empty, even more empty than the infamous stretch along 237 from Sunnyvale to Milpitas. Some of the glittering office space was already being used for storage! of cardboards, packing foam, etc. Driving through the abandoned industrial park, two words came to my mind: Great Depression.

Somehow, I cannot mentally connect the empty office space to the fully occupied housing development a mile away. Why can't the fully occupied developments with bezillion homes at least create some employment for the office space below? Where do these people living in Silvercreek or Evergreen commute to?

However, the good news is, now I know we definitely will have plenty of space available for the homeless and NEOs who will be kicked out of their residence soon. There is no way that rent can go up, if all the empty office space in the Bay Area can be modified to accommodate people, which they will after being left vacant for years, there will be enough housing to go around for 3 generations.

OO,

Ouch! What's the vintage for these office parks? Were they the result of overbuilding during the dot.com boom?

If gas prices go up above $5/gallon (Robert Cote, I promise you this is not one of my environmental screeds, so just bear with me), these vacant offices make good capsule motels for the 100 mile per day heroic commuters.

Silver Creek appears to be about 10 miles from downtown SJ. That doesn't seem too bad of a commute.

CC, you Mom had a different story to tell when i was balls deep in her fat ass, she said she only allows you 2hrs a day internet time before your ritalin. Bad troll, no go rub salve on mommy's bunghole.

Whoops I meant "now go rub salve on mommy's bunghole"

Hey CC why not stop by the blog party this weekend so i can bounce a alum. baseball bat off your head.

rickus, the dude abides

Hey CuriousCat, how's your mommy's bunghole? 35%, hmmm, your head must be very far up your ample ass indeed. All published stats indicate less than 10, nice try asshole, hey isn't more fun for you to post your tired fucking bullshit on craigslist? That way you can get the man/man action you want and post your bullshit to a larger crowd.

Tell you mom not to eat so much corn!

Just stopped by. Nice to see such polite intellectual dialogue.

Charming. You are the silver tongued one.

However, the correct stat is 35%. Here is a rundown on various stats for SF:

http://quickfacts.census.gov/qfd/states/06/0667000.html

BTW, the SF home ownership stat for 2005 is 34.4%... down slightly from the 2000 census.

Curious Cat, Rates are still low, but prices are very high. With higher or lower rates the direction for home prices will be down. Lower rates will mitigate the decline a little... but only a little.

Zephyr, does your Mommy eat too much corn also?

Homeownership rate, 2000

I'm sorry you hermaphrodite fucking moron, did you not fucking see 2000?

Dear WoopAss, oddly enough that is the very same address where I was balls deep in your mom's ass. You really really have to tell her to eat less corn.

Hey Zephyr do you pitch or hit with the other troll? Just Curious. Man you two are so super savvy, why waste your time here? I mean with all the money to me made why bother typing a few tid bits of your financial prowess here? Whoops gotta go, seems your Mom just had a corn dog and needs me to dislodge it from her colon.

tinyurl.com/flrz5

Median home value: $835,000
Median family income: $88,450
Median home value to median family income: 9.4

tinyurl.com/fehrd

tinyurl.com/l66z3

tinyurl.com/f2mlq

tinyurl.com/fh93a

oh shit gotta go, your mom is all lubed up again. But seriously, you have to tell her to eat less corn.

so sorry maggots, one more

tinyurl.com/jk7dr

hey I have an excellent million dollar idea, why don't you partner with ha ha and get a troll only blog? Could be fun for you fucking maggots. Let me guess, no friends, small cocks, and not a lot of female companionship?