patrick.net

Yet again, I recommend looking to Calculated Risk for the real deal, this time on what the Case-Shiller data for "June" (really a moving average of March-April-May) mean:

http://www.calculatedriskblog.com/2010/07/survey-shows-house-prices-falling-in.html

I don't know why you people are so preoccupied with the Bay Area. Basically, the Bay Area is the future Detroit. It no longer has anything going for it. All the easy money made in the 80's & 90's are now gone. Bay Area is basically a wanna-be New York or Chicago or even LA (which is a pretty poor excuse for a city, but still much better than the Bay Area). The state is bankrupt, the city (if you can even call it that) is way overcrowded. Everywhere you go, you see nothing but rude people. You can't get any good service anymore. There are no good theaters or museums or even public transportation. RE prices in the Bay Area should be about 1/2 of Chicago's, just like they were back in the 50's and 60's, not 3 times higher.

Another link, this time to Denninger, who argues that the March-April-May price increases are *more than accounted for* by the inflationary effect of the $8000 tax credit.

http://market-ticker.denninger.net/archives/2526-Home-Prices-In-May-Were-Higher!.html

Oh yes, I forgot to mention all the lousy schools around here. That should knock the house prices down another 20-30% relative to any other self-respecting city.

bob2356 says

By what miracle of mathematics does a 23% increase wipe out a 36% decrease? Let’s do this slowly. A 36% decrease from 100 is 74. A 23% increase of 74 is 17 (ok so I rounded down the .2%). In no known numbering system does 17=36 or is even considered close.

Its a tall order to expect a journalist to comprehend math !

dunnross says

I don’t know why you people are so preoccupied with the Bay Area. Basically, the Bay Area is the future Detroit. It no longer has anything going for it. All the easy money made in the 80’s & 90’s are now gone.

After hearing about the Boom that is why everyone from the East Coast has rushed into the SFBA after the peak in 2000.

Oddly Oracle's Larry Ellison made the same comparision to Detroit as have many other business leaders have. Just not catching on for some folks.

So why dont you just move to Detroit then?

I hear it's much cheaper.

Sure he's wrong sometimes--of course he is. But he puts his predictions out there along with his reasoning--usually backed up with graphs and data.

I don't recall him hyping his previous successes unless someone like you starts attacking him for always being wrong.

And how does he present his ideas unfairly? I disagree completely with that statement.

tatupu70 says

Sure he’s wrong sometimes–of course he is. But he puts his predictions out there along with his reasoning–usually backed up with graphs and data.
I don’t recall him hyping his previous successes unless someone like you starts attacking him for always being wrong.
And how does he present his ideas unfairly? I disagree completely with that statement.

His quote above:
Not sure what you’re talking about with oil. I sold all my options at $134 and posted the sale to the board. Most of my comments since then have been very long term. I do remember saying that anyone buying 2014 oil contracts was guaranteed to make money and I still believe it.
What does ANY of this have to do with real estate or the fact that I was right about the direction of the market?
----------------

I remember him calling for 2010 oil contracts in 2008. Changing it to 2014 would be a revision of history to allow himself to save face. Then his comment about being right about the direction of the market again is selective memory of history and leaves out how he was wrong about the direction of the market before he was right.

“Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.”

–Sir John Templeton

mthom says

I remember him calling for 2010 oil contracts in 2008. Changing it to 2014 would be a revision of history to allow himself to save face. Then his comment about being right about the direction of the market again is selective memory of history and leaves out how he was wrong about the direction of the market before he was right.

It's probably impossible because he posts a lot, but if you could post a link to his 2008 comments then it would be much more convincing. Because just saying you think you remember him saying something in 2008 does not hold much weight in my mind.

In any event--like I said earlier--agree or disagree, he at least presents data to backup why he thinks what he thinks. I maintain that he's not deceptive. Wrong?--sometimes, just like anyone else.

gameisrigged says

and wages are falling

No they're not.

My fear as a renter would be the landlord could be about to get foreclosed on. With 6 months of your rent money, they could disappear leaving you to face eviction when the bank takes over. At least paying month by month basis, you could withhold the rent money and use to toward renting and moving into another rental or you could use the rent money to pay the bank or who every takes over the property so you could stay. No one going to want to hear that you pre-paid the rent for the next 4 or 5 months.

thunderlips11 says

BLS says wages went up .8% versus CPI increases of 1.8%. That’s a drop of 1% after inflation.

Fair enough--I assumed he was talking about actual wages, not inflation adjusted wages.

gameisrigged says

The “investors” aren’t going to keep all those properties; they will eventually have to be sold to people who will actually live in them

Depends if they cash-flow or not. Management companies can handle the headaches, the investors have the tough task of doing nothing for the money.

Now, I do think we are on the Japan course of a non-recovery this decade, and rents and land values coming under fire from all side (taxes, health insurance/costs, energy costs, globalization).

But past history is that a recovery has come from somewhere -- in the 1980s it was Reagan's deficit spending and personal computers, in the 90s it was the internet and the benefits of globalization, in the 00s it was suicide lending and the Bush tax cuts.

are we going to have one of these idiot threads every time there's a number that moved in a positive direction?

all markets are volative to some degree. there's always some data that can look positive and some that look negative.

to make any generalization based on a single data point is more than retarded.

tatupu70 says

gameisrigged says

and wages are falling

No they’re not.

Yes they are.

Troy says

gameisrigged says

The “investors” aren’t going to keep all those properties; they will eventually have to be sold to people who will actually live in them

Depends if they cash-flow or not. Management companies can handle the headaches, the investors have the tough task of doing nothing for the money.

I made the point that rents have fallen and vacancies are up, so how is the market going to absorb a sudden influx of new rental properties? You didn't really address the point; you just made some vague reference to "cash-flow". How about it?

gameisrigged says

tatupu70 says

gameisrigged says

and wages are falling

No they’re not.

Yes they are.

Well, OK. Here's a link to a site that is very pessimistic about the future, but even they show that wages have grown and continue to grow.
http://www.thecomingdepression.net/main-street/poverty/wages-growth-lowest-in-27-years-minimum-wages-are-bad/
You didn't say real wages...

gameisrigged says

I made the point that rents have fallen and vacancies are up, so how is the market going to absorb a sudden influx of new rental properties? You didn’t really address the point; you just made some vague reference to “cash-flow”. How about it?

All those people that are getting foreclosed on have to live somewhere, right?

I don't know about your area - but in the Monterey/Seaside/Marina, CA area, rents are falling.

1-2 years ago you couldn't touch a three bedroom for under $2,000-2,200/mo. The average is now around $1700-1850/mo.

My wife and I move into our new (rental) in about two weeks - we scored a nice sized 3 bed 2.5 bath, in a gated community for $1550/mo. Every rental in the 1700-1800/mo bracket we called about, and they were almost all underwater homeowners, who were just trying to make the mortgage. We decided not to rent from any of them because a risk of default...Most of the owners had moved into the Salinas area for cheaper housing so that they could at least break even without damaging their credit. I would say that over 1/2 of the underwater landlords were willing to negotiate.

You'll always see a few around here priced in the $2200-2600 range, and usually are newer construction... but they sit, and sit vacant for long periods of time, some of which never rent.

You could say that every market is local.... or that rents don't go down - but from what I've seen, rents are falling.

tatupu70 says

gameisrigged says

I made the point that rents have fallen and vacancies are up, so how is the market going to absorb a sudden influx of new rental properties? You didn’t really address the point; you just made some vague reference to “cash-flow”. How about it?

All those people that are getting foreclosed on have to live somewhere, right?

Um, that's a zero sum game. If someone moves out of a house and into an apartment, then that house becomes vacant. How would that add to the demand for rental properties?

Iwong, #5 needs one of these "*". That big 'ol pipeline that starts with a T brings most of the water to SanFanny.

tatupu70 says

gameisrigged says

tatupu70 says

gameisrigged says

and wages are falling

No they’re not.

Yes they are.

Well, OK. Here’s a link to a site that is very pessimistic about the future, but even they show that wages have grown and continue to grow.

http://www.thecomingdepression.net/main-street/poverty/wages-growth-lowest-in-27-years-minimum-wages-are-bad/

You didn’t say real wages…

O.K., real wages then. What's your point, anyway? You just linked to an article that is pessimistic about the future of wages. Isn't that exactly what I am saying? Who is going to pay increasing prices for homes when their wages aren't increasing?

gameisrigged says

O.K., real wages then. What’s your point, anyway? You just linked to an article that is pessimistic about the future of wages. Isn’t that exactly what I am saying? Who is going to pay increasing prices for homes when their wages aren’t increasing?

My point was twofold:

1. Wages are increasing.

2. Home prices should track actual wages more closely than real wages. That's why they are often cited as an inflation hedge. So, if wages are increasing even now, then it stands to reason that housing prices could increase. Especially if the economic recovery strengthens and more jobs are created.

gameisrigged says

Um, that’s a zero sum game. If someone moves out of a house and into an apartment, then that house becomes vacant. How would that add to the demand for rental properties?

It wouldn't. But it wouldn't add to the supply of vacant properties either. Like you said--it's a zero sum game.

tatupu70 says

Wages are increasing.

Note for the strawberry pickers with the $700K houses . . .

http://www.latimes.com/business/la-fi-ag-overtime-20100729,0,265499.story

tatupu70 says

gameisrigged says

Um, that’s a zero sum game. If someone moves out of a house and into an apartment, then that house becomes vacant. How would that add to the demand for rental properties?

It wouldn’t. But it wouldn’t add to the supply of vacant properties either. Like you said–it’s a zero sum game.

Um, that's nice. I didn't say that it would. Fortunately, my point that vacancies are above normal did not depend on such an argument, but rather on actual statistics for vacancies, which can be seen in the links I posted. So your point is decimated, while mine remains verified.

I don’t know why you people are so preoccupied with the Bay Area. Basically, the Bay Area is the future Detroit. It no longer has anything going for it.

For me, the real majesty of the Bay Area lies in its natural splendor, coupled with its highly photogenic architecture/infrastructure. You're probably right on at least one or two points, though -- it is shockingly expensive and home to one of the most atomized populations that I have witnessed in America, outside of some really scary parts of Louisiana. What's weird to me is that the the dozen or so times I've stayed there, I've come away with the distinct sense that nobody who lives there really gets to enjoy as much of the landscape as I do as a visitor. I've turned people onto things to do and see in that city that 30+ year residents haven't ever seen or done. These days, I think a Southwest ticket is a helluva lot more sensible than trying to set up shop in SF.

tatupu says:

It wouldn’t. But it wouldn’t add to the supply of vacant properties either. Like you said–it’s a zero sum game.
gameisrigged says
Um, that’s nice. I didn’t say that it would

But he then says:
gameisrigged says

If you have evidence (evidence, not conjecture) that the rental market is suddenly able to absorb a huge increase in available rentals, please post it.

So, which is it?
So, trying to understand you--your point appears to be that there is an oversupply of housing right now. Fair enough--I would tend to agree. The problem is that the extra houses tend to be in areas where people don't want to live so they don't affect the prices/rents of housing where people do want to live.
Further--US population is growing and that will most definitely erase that oversupply of houses at some point. It's just a matter of time...

I think phrases like "more than retarded", are.

I heard a good quote once: “Prop 13 would be ended overnight if everyone could just see on a map how little their neighbors were paying.” Since it takes a little work to see what people around you are paying, most people don’t bother to look. Not to mention that exempting corporations and trusts is exactly opposite to the supposed reason Prop 13 was passed (protecting the elderly poor).

The more important question that should have been asked of buyers over the past 10 years,
why buyers have been ignoring historical price trends. The first new neighbor paid $200-300K for a house in 1996, while 2nd new buyer in 2000 overpay for similar home to the tune of $500K. Next buyer down the street in 2005 paid $800K. Now they 3rd buyer is going into defualt and putting the Y2K buyer at risk.

Higher property tax is the consequences of overpaying to begin with.

I thought C-S index was a 3 month average with a one or two month lag... So would May numbers actually reflect March and April - or for previous months .. ?

You can probably get a government grant or get some special interest group to fund it.

Although trying to get the grant may take more effort than building up the website

Although people that go on zillow don't specifically look for that. (I check out Zillow often and I wasn't even aware that the info was there) If there was a website specifically made for that purpose (maybe simply by taking Zillow's data?) there may be more reaction to it.

It is ironic, when I see some of the posts here about some great buys of houses like that "Willow Glen" house they're asking 850K for even though it's not in downtown Willow Glen,

What is the property tax on that one? Per year? Per 6-month billing cycle? Per month? How much money do I need to earn to pay that property tax bill? Then ptiemann or someone like that will Post the Platitudes that "property taxes can be ignored."

Oh yeah?

Thomas Wong is right. Prop-13 can be your friend or your enemy but it is certainly you're enemy if you pay too much.

And exactly what is going to support higher house prices? Big American companies have found ways to hoard wads of cash without hiring any Americans. The current unemployment rate could be here to stay. The easy money from crooked bankers is gone.

I have a confession to make: I don't know who "Snooki" is. Neither does our Dear Leader, or so he claims. Just another funny lie he was caught in. Check it out:

http://gawker.com/5599717/obama-flip+flops-does-he-know-who-snooki-is-or-not?skyline=true&s=i

Well, then 99% of the country (at least those who pay attention to housing), defend the same position. I'm not so pompous that I think I'm smarter than everyone else - particularly those who spent years working on this. I guess you are.
Just let us know when you're going to be on TV discrediting the C-S index. I'll be sure to watch. Thanks!