patrick.net

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.

bubblesitter says

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.

Yeah all cash deals aren't so common. But it just so happens 2 closed today. But every sale has got at least 150k down payment. There is plenty of money out there. I think it's overpriced too. But many are still paying the price so there must be something wrong with my valuation on these properties. These people are paying comp prices, and it has not changed since late 2008. There are less bidding wars from my observation but it doesn't stop that only bidder from bidding as if there was a bidding war.

its beginning to happen

http://www.housingtracker.net/

Here is the data which I trust much more than either dqnews or C-S, because I can verify it myself. This is the data showing asking prices from MLS. If you go to MLS listings, like mlslistings.com, for instance, you can type in the median prices reported by housetracker and see that there is an equal number of houses above and below that price (hence the median). Not only is this data more recent than either dq or C-S, it is not subject to any manipulations by the realtwhore cartel. The data is showing for most US & CA cities, that prices are now below those of Mar, 2009.

PS: This data was also the first to report prices falling back in 2006-2007 when all the realtwhores were parading around, cheerleeding price increases from dqnews & C-S.

And this is one heck of a reality for you Mr. Quack!

schmitz_kris says

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

Nice slam! :D

Yes, and another dose of reality for Larry the Duck. It seems as if the news agencies did not consult with Larry, before they published that bad report.

Deal with it Larry, the bottom didn't hit in 2009.

Anybody who says job market is getting better, here is the labor department data.

http://money.cnn.com/2010/10/08/news/economy/september_jobs_report/index.htm?hpt=Sbin

bubble .... not only that, but the government continues to use the highly misleading and overly optimistic U-3 statistics instead of the much more accurate and encompassing U-6 which counts underemployed (part timers that need full time work), people who have lost their benefits, others that have simply lost hope and given up looking for work, etc.

RayAmerica says

bubble …. not only that, but the government continues to use the highly misleading and overly optimistic U-3 statistics instead of the much more accurate and encompassing U-6 which counts underemployed (part timers that need full time work), people who have lost their benefits, others that have simply lost hope and given up looking for work, etc.

Yeah, that underemployed part is always in the back of my mind. This is not real data. A guy who lost his six figure job and working a $13 jobs to get past his bad days is not considered employed by any means.

http://www.boston.com/business/articles/2010/10/07/job_openings_increase_for_second_straight_month/

"Job openings rose in August for the second straight month and layoffs dropped sharply, evidence that the job market is slowly healing."

What?? Obviously they didn't get the message that the world is ending. Would you bears consider job openings to be forward looking? I would say so. And unemployment numbers tend to be backward looking, huh?

Unemployment will improve .... it's just going to take a little bit of time. LOL

http://blogs.investors.com/capitalhill/index.php/home/35-politicsinvesting/2128-us-wont-recover-lost-jobs-until-march-2020-at-current-pace