patrick.net

EastCoastBubbleBoy says

Vain - 1) coming up with $90k - that’s the hard part.

This may be too personal of a question, but since we only know by your Alias there's no harm in asking. You been a member of this website since before I joined in 2006. How much have you saved towards a down payment to buy a house.

seaside says

Vain, I think current DTI is 0.31 and 0.43 front and back. So, do your math again with that ratio, and see if bank will give 65Kers 360K loan at 30yrs/4.3%. I can hardly think so. If I were one of those 65K’er, I wouldn’t take 360K loan even if I could. 5400 gross, 3500 or so net/mo, and take 1800/mo for mortgage gives you 1700/mo in your hands. 1700/mo for prop tax, HOA if any, util, auto loan, credit card payments, food, cloth, health care, expenses for the kids, transportation, maintenance and other fees in place like SF? You gotta think twice about it before taking it.

Last year me and my wife's combined pre-tax income was 112k and money is tight with paying our 340k 5% mortgage. (and no HOA). I don't think it's possible for someone to pay a 360k loan at 4.3% earning only 65k.

Your graph proves my point! The market remained stagnant for the most part and did not recover its value until the mid 1950s. Note the Sucker's Rally of '33 .... just as I stated. By the way, where's your Beanie Baby graph?

RayAmerica says

Do you have any data as to when the beanie baby market bottomed out?

The Beanie babies product line stated in 1994, and the market peaked in 1998. The company noticed that when product lines were retired and new product lines introduced, sales spiked. So they continually retired and introduced new product lines. So they decided that if they stated if they announced that they would stop making Beanie Babies on December 31, 1999, (no reason was given) it would spark a feeding frenzy, but it had the opposite effect. People began to lose interest and the market started to slide. They later "changed" there mind about ending production, but once the slide began it just accelerated.

Tech .... are you sure you aren't describing the housing market? LOL

RayAmerica says

Tech …. are you sure you aren’t describing the housing market? LOL

Of course, sort like they stopped making Eichler homes.

E-man says

However, he didn’t acknowledge the fact that if you bought in 1932, you’d been handsomely rewarded.

Some people don't have 25 years to be rewarded for their investment efforts. My point is that the stock market took that much time to recover from the crash of '29.

thomas.wong1986 says

Of course, sort like they stopped making Eichler homes.

..... or McMansions with zero down and interest only?

RayAmerica says

E-man says

However, he didn’t acknowledge the fact that if you bought in 1932, you’d been handsomely rewarded.

Some people don’t have 25 years to be rewarded for their investment efforts. My point is that the stock market took that much time to recover from the crash of ‘29.

Looks to me like you'd be pretty happy after 5 years. 400% if I'm reading that correctly. I'd take that return...

tatupu70 says

Looks to me like you’d be pretty happy after 5 years. 400% if I’m reading that correctly. I’d take that return…

Don't forget you're looking at the DOW .... 30 stocks. There are an abundance of losers even in bull markets, so buying in '32 depends on an awful lot of variables.

After 1929, no one had money to invest in the stock market and the
publics irrational exhuberance with get rich in stock quick faded.

So the talk about people rushing back is all talk.
The volume in 1929-30 highs at 4m shares dropped to a fraction
for decades.

It wasnt until the passage of the 1933/34 SEC Act did it make sense to
even put a penny into the market. People before 1934 were "investing" into
companies tht many didnt disclose earnings results and we didnt have a standard
financial reporting quidelines to compare company results. Everything was based
on rumors and shady stories.

thomas.wong1986 says

mthom says

You disprove your own point with these posts Thomas. Yes, in your mind it is worth $600k, but it’s listed at $900k. Fine, they’ve been dropping their price, but you don’t know where it will end up selling. It’s not gonna be $600k though. And it certainly doesn’t seem to be crashing down to the 97 price of $509k.

Your in for a shocker if you think prices will not head down to 97+inflation.
Fact is we may even go down further to nominal 97 prices. Yes! $509K and less…
There were many home like this 3000 sq ft $1-1.5M which sold at peak years and will
be underwater for many years. Many will sell at a loss, and that will push lower tier homes
even lower for years to come.
PS. Dont tell the owner of the home in the link prices are going higher!

In the past 3 months, 9 houses over 3000 sq ft sold in 95120 according to redfin. The lowest price: $1,135,000. Currently listed, there are 2 (including the one you posted) near $900k and everything else is above $1M. You are delusional if you think prices are somehow going to get down to the $500k area. If you want to be realistic and say some may get down to $800k - ok, fine, maybe, at least it's reasonable. But to say $500k, come on.

TechGromit says

EastCoastBubbleBoy says

Vain - 1) coming up with $90k - that’s the hard part.

This may be too personal of a question, but since we only know by your Alias there’s no harm in asking. You been a member of this website since before I joined in 2006. How much have you saved towards a down payment to buy a house.

I'm not at 90k yet, that's for sure. In all reality, I probably would be close too it, if not for a few bumps along the way. (unexpected car repairs / replacement / tax man coming for his share, stuff like that). If nothing else, I've been able to pay off a good chunk of my student loan debt. (engineering school didn't come cheap, and the non-federal loans couldn't be consolidated.)

Based on what I have now, I can theoretically come up with 20% down (plus closing costs) but that would drain my savings to almost zero. Given that I want some cushion to cover the unexpected, if I buy in the next six months, I'll probably end up putting down 10% when all is said and done.

Of course, its robbing Peter to pay Paul. My retirement isn't funded nearly as much as I would want.

Tech your numbers point to the crux of the problem. You and your wife make a good salary, but its still tight. If those that are fortunate enough to have good jobs can barley make it how is the other half doing it?

ECCB, you're still doing way better than most people. People I knew dreamt of getting FHA 3.5%, and the truth is, I don't think they have that 3.5% downpayment in hands. It looks like you've been saving for years, and I am sure you're gonna reach the point where you want to be in near future. So, chin up.

TechG, that's what I thought. Yours is 460K or something like that, right? That does not look like a big mansion, and you're at top 15%. 85% of people in US earns less than you. But you still feel squeezed after you purchased the home. Something is not right. Either you gotta earn more or the price gotta be bit cheaper. But ultimately, the buyer should know what to buy or what to pass. Home buyers thinking like investors buying home based on future market forecast is a recipe for trouble. People had no clue about that for years.

seaside says

TechG, that’s what I thought. Yours is 460K or something like that, right? That does not look like a big mansion, and you’re at top 15%. 85% of people in US earns less than you. But you still feel squeezed after you purchased the home. Something is not right. Either you gotta earn more or the price gotta be bit cheaper.

TechG,

Do you mind giving a rough estimate of your budget? I find it hard to believe that money is tight. There must be something quite heavy weighing you down. Student loans? Credit cards? But I guess it is dangerous to rely on two incomes to pay the mortgage it is a smart idea to save some money for a rainy day.

Vain, sorry if I made you feel discouraged.

I think TechG talked little bit about it in the other thread, I just can't find it.
There's time shift b/w there and here in the east, so you're gonna wait till TechG wakes up in the morning, that is, if he is not a night owl like me. My idea is, if I may, it's tax and utility cost. You may ends up paying at least twice as much as what you would've paid for similarly priced home in CA. The real disposable income after those is relatively small.

And you got that right. Relying on two income is dangerous. But again, home price is little too high for ordinary workers to afford only w/ one income. That's my goal though.

mthom says

In the past 3 months, 9 houses over 3000 sq ft sold in 95120 according to redfin. The lowest price: $1,135,000. Currently listed, there are 2 (including the one you posted) near $900k and everything else is above $1M. You are delusional if you think prices are somehow going to get down to the $500k area. If you want to be realistic and say some may get down to $800k - ok, fine, maybe, at least it’s reasonable. But to say $500k, come on.

And what were prices of these mega mansion before the bubble ?
And who will be left buying these mega mansions down the road.
Not hard to see whats happening around with the local economy.

--------------------------------------------------------------------------------

That’s not just less than the dot-com era, that’s well below the 315 public companies the valley had in 1994 when the Mercury News started keeping track.

seaside says

ECCB, you’re still doing way better than most people. People I knew dreamt of getting FHA 3.5%, and the truth is, I don’t think they have that 3.5% downpayment in hands. It looks like you’ve been saving for years, and I am sure you’re gonna reach the point where you want to be in near future. So, chin up.

Believe me, I'm thankful, and keenly cognizant of how fortunate I have been. I'm not complaining by any stretch.

thomas.wong1986 says

mthom says

In the past 3 months, 9 houses over 3000 sq ft sold in 95120 according to redfin. The lowest price: $1,135,000. Currently listed, there are 2 (including the one you posted) near $900k and everything else is above $1M. You are delusional if you think prices are somehow going to get down to the $500k area. If you want to be realistic and say some may get down to $800k - ok, fine, maybe, at least it’s reasonable. But to say $500k, come on.

And what were prices of these mega mansion before the bubble ?
And who will be left buying these mega mansions down the road.
Not hard to see whats happening around with the local economy.

Yeah, the local economy shows people are still buying these houses for $1M+.

I didn't know "20 cities" make up the entire real estate market in the USA. Furthermore, there is no such thing as a market that goes continually up or down over a long period of time. I noticed too that you didn't mention one word about my point of this market enjoying historically low interest rates compared to the peak that was considerably higher. I guess you must have decided to paddle around the pond on that one.

I frequently read the Sfgate page for my daily news fix. Whenever there are articles about the housing market, you can take a look at the large amounts of comments. You will soon realize that there are LOTS people with 200k+ downpayments (or so they claim) just waiting on the sidelines.

The bears need to wait until the high down payers and high earners are satisfied. The high down payers are very concerned about QE so they are anxious to spend it.

thomas.wong1986 says

RayAmerica says

Tech …. are you sure you aren’t describing the housing market? LOL

Of course, sort like they stopped making Eichler homes.

OMG I looked at an 'Eichler' in San Mateo, kind of on a lark. What a turd! It isn't showing up in sales records on Redfin yet, but it's gone from the listings. Wonder if it sold or what? It was 'all original' down to the 1955 oven and dryer. There was even the original building permit tacked on the wall in the garage - I think it was valued at $12,000.

I have learned, there are 'eichlers' and there are 'Eichlers'. I guess it's the difference between the custom built and the assembly line variety.

seaside says

TechG, that’s what I thought. Yours is 460K or something like that, right? That does not look like a big mansion, and you’re at top 15%. 85% of people in US earns less than you. But you still feel squeezed after you purchased the home. Something is not right. Either you gotta earn more or the price gotta be bit cheaper. But ultimately, the buyer should know what to buy or what to pass. Home buyers thinking like investors buying home based on future market forecast is a recipe for trouble. People had no clue about that for years.

Technically the original list price was 460k, but we ended up getting the house for 395k. We put 10% down, and in a refinance about 18 months ago, we just barely made the 10% equity requirement to get a lower PMI payment. For PMI equity is calculated in 5% increments. So even if you have 19.98% in equity, it's considered 15%, or 9% is considered 5%. I don't think of my house as a big mansion, but when you consider the houses in CA going to 600k plus I guess it would be. It's 3,500 sq feet living space, and almost another 3,000 sq ft in non-living space (unfinished basement, garage, attic room) on a 2 1/2 acre plot of land. To be fair, I felt "squeezed" for the first year or two when I purchased my first house for 85k in 1999, but I was only earning about 35k at the time, as my income increased, the pressure eased up. If I still lived there, it would have been paid off several years ago.

Vain says

TechG,
Do you mind giving a rough estimate of your budget? I find it hard to believe that money is tight. There must be something quite heavy weighing you down. Student loans? Credit cards? But I guess it is dangerous to rely on two incomes to pay the mortgage it is a smart idea to save some money for a rainy day.

Hmm mainly credit cards, but there are other expenses I hadn't counted on that complicate things. I'm estimating the minimum payments on the credit cards, I don't have the exact figure in from of me, but I rarely pay the minimum payment, unless money it tight that month.

Mortgage $2,730.59
Infiniti Lease $410.00
Comcast Cable $65.00
Water Bill $25
Car Insurance $125.00
Verizon Phone $35.80
Verizon Wireless $55.00
Waste management 96.99 every 3 months $31.33

Total Fixed Costs $3,472.47

Electric Bill $250.00
Auto Fuel (2 cars) $350
Credit Cards Balance Min Payment

American Express $9,000.00 $150
Discover $7,000.00 $100
Visa Citi Cards $2,500.00 $40
John Deere $2,200.00 $60
Geothermal loan $11,000.00 $168

Food $200

Total After tax income about 6.4k a month, but fixed cost eat up more than half of that leaving about 2900 to cover credit cards, grocery, gas, dining out, medical, car repairs, xmas/birthday gifts and other unplanned for expenses. I really didn't count on the Geothermal heating system going so soon after buying a house, that added 15k to my overall debt.

It definitely appears that the Credit Cards are taking a toll on you in the mind. Focus on getting rid of the credit card debts and I'm pretty sure money wouldn't "feel" so tight anymore. But you're pulling through. That's still excellent.

I like to keep my fixed costs low. I drive crappier cars which require little insurance ($18/month). I do not even need to purchase comprehensive or collision coverage for it. Instead of using Comcast cable TV, I just subscribe to Netflix and I can watch tons of movies and shows on demand with no commercials.

The other worrying thing about your finances, is that you're holding a lot of debt. Anything that might impact your job/income could quickly cause problems for you in this scenario.

During your next car "upgrade" phase, I would be like Vain and recommend pulling back that expense. Better mileage car, used and low insurance premiums. You haven't included tax premiums or any housing repair costs in that list either, which I'm guessing you're dumping on credit cards every year.

$200 for food? Are you eating Ramen noodles every day so you can drive a newer car? $2/meal seems fairly tight!

I think I got it all wrong. I must be emotionally tied with my own area too just like many others.

TechG, is your home in suburb little far from the city? A home like that would be way expensive than that if it were in my area. Typical 450K home in my area is, 2000~2500sqft townhouse, or 50yrs old 1700sqft 3/2 on 0.25acre. Utility is relatively cheaper too. I would expect quite more than that in my area.

Your credit card balances look like mine 9 years ago. I managed pay them all off though, it was hard, and that was a part of the reason why I am stucking in crappy rental. Anyway, I recommend you start pay off the card w/ lowest balance first, move on to another, one at a time.

The cable company jacked up the rate right after my promotion period is gone. Cell phone bill will go up too. Yeah, we need new cell phones, and they force us to switch calling plan. This is kind of waste especially when you're not the kind of person who's on TV or phone all the time. And, my old mercury is eating gas up like hungry pig.

It’s 3,500 sq feet living space...
I'm almost afraid to ask; how many people live there?

seaside says

TechG, is your home in suburb little far from the city? A home like that would be way expensive than that if it were in my area. Typical 450K home in my area is, 2000~2500sqft townhouse, or 50yrs old 1700sqft 3/2 on 0.25acre. Utility is relatively cheaper too. I would expect quite more than that in my area.
Your credit card balances look like mine 9 years ago. I managed pay them all off though, it was hard, and that was a part of the reason why I am stucking in crappy rental. Anyway, I recommend you start pay off the card w/ lowest balance first, move on to another, one at a time.

I live about 40 miles from the closest major city (Philadelphia), 450k here will get you a house as big if not bigger than my house, but the lot size will depend on what you looking for. There plenty of McMansions on lots not much bigger than the house is.

As the the Credit Card bills I'm making some progress, I paid off a few cards and hope to pay down/off others in a few years.

As for the commet on my food budget, some these figures are estimates, Generally me and my wife do one major shopping a month for around $200 then I get milk, bread and sometimes lunch meat on as needed bases. Also we have no children to feed, so our food costs are lower and we tend to eat out 2 or 3 times a week. More often then I like, but have to keep the Wife Happy. :)

As for the Infiniti, it's a lease for my wife, I drive a 2003 honda that been paid off since 2005.

This thread gives a gentle reminder of what excessive debt can do to individuals and country. Don't forget that whole bubble was caused by excessive borrowing(I'll pass as to who is to blame for that).

gameisrigged says

Leave it to Larry to completely miss the news that California prices have fallen 3 months in a row. But again, it’s a waste of time to prove anything to you, because you will just deflect with some irrelevant bullshit like you always do. You will claim that our evidence is to be disregarded, and you will find your own “data” that has nothing to do with the subject and try to pass it off as relevant.

Just post the link of 3 months of declines in CA housing prices. As one who is actively looking in CA, I must have missed these declines. But that info surely would be helpful in my search.

I can already hear the gears turning in the duck's brain, trying to figure out how he will dismiss the data out-of-hand and still retain a condescending attitude and feigned air of superiority.

Heck, I'll make it even easier for you. They have a chart right on the front page:

You know, it's funny. When I talk economic metrics with folks, especially those concerning the housing market, the older folks and senior citizens (those who have had their homes 100% paid for quite some time already) never get so defensive/emotional about the value of their property. The younger, indebted individuals/"family men," etc. ALWAYS do, however. Why? IT'S USUALLY ALL THEY'VE GOT, and they're in big debt to boot. THIS IS EXTREMELY STRESSFUL. Give these people a break. Deep down they know this ship is sinking (look at the details of today's job numbers - it's nothing but pathetic all around with the few sectors that were strengthening as a result of unprecedented money pumping now turning over and headed south once again), but when your livelihood and/or ability to sleep at night and remain at least functionally optimistic about the future depends on you believing something or holding a certain paradigm, that's EXACTLY WHAT YOU DO.

schmitz_kris says

Deep down they know this ship is sinking (look at the details of today’s job numbers - it’s nothing but pathetic all around with the few sectors that were strengthening as a result of unprecedented money pumping now turning over and headed south once again

That's funny. Because just yesterday I saw a report saying job openings increased again last month. Guess people who are certain things are going south will continue to believe that no matter what the reports say...

Yesterday? Who are you? The first Friday of the month (whole week) which was TODAY is when the most important jobs report (the NFP) is released by the BLS.

It was terrible and far below industry-wide expectations (1,900% worse than general consensus).

http://www.bloomberg.com/news/2010-10-08/china-stocks-yuan-rise-on-holiday-sales-moody-s-review-copper-advances.html

ADDITIONALLY, jobs loss numbers were revised HIGHER (MORE jobs were lost than initially calculated) for the previous two months.

http://bls.gov/news.release/pdf/empsit.pdf

schmitz_kris says

Yesterday? Who are you

Who am I? Who are you?

It was a different report--one that measures job openings...

tatupu70 says

That’s funny. Because just yesterday I saw a report saying job openings increased again last month. Guess people who are certain things are going south will continue to believe that no matter what the reports say

I would not consider job openings posted as having any meaning. Opening gets posted and get taken down without anyone filling the position. Same posts reappear 3-6 months again. I would only use ADP number as having legit meaning.

Beyond all that we only have some low-200 current public companies in SoBay where we had over 340 public companies in 1994 and over 400 public companies in 2000. We have a long way to go to even consider calling a recovery.

I don't see how prices can dip much again. Today I just saw two all cash deals close in my area. These are not investors.

mlslistings.com

MLS 81044879 listed at $499k, just closed at $550k all cash today.
MLS 81044509 listed at $649k, closed at $640k all cash offer today.

Sure it may be overpriced right now. But until all this money runs out, I don't see how prices will ever go down.

Vain says

until all this money runs out, I don’t see how prices will ever go down.

You just clarified yourself. All cash deals are common but how many of the total % of sales? This foreclosure moratorium is going to hit banks hard, as Patrick pointed out. Cash will be the best option for seller to take and hence lower price. Anybody paying full cash at or above asking price(I should say more than comp price) is just stupid.