patrick.net

maxweber says

Anyone else seeing the job market heating up big time? Just ate with a headhunter who said it was hottest he’s seen in six years. Same everywhere?

Yeah right! LOL.

maxweber says

Anyone else seeing the job market heating up big time? Just ate with a headhunter who said it was hottest he’s seen in six years. Same everywhere?

anecdotal evidence isn't really helpful in giving an overview of the health of the overall market.

software engineers have been recruited heavily by facebook, google, and even startups for the last year.
anything to do with construction is dead.

you really have to go by unemployment/underemployment numbers to get an overview.

..could be that unemployed have now a feeling that the new congress will limit UE to 99 weeks, hence take whatever to pay the bills. That has nothing to with housing recovery. Housing recovery needs well paid jobs back...now that easy loan days are gone....figure it out ..which way the housing is heading.

ch_tah says

Uh…he said 5-10 years.

In Japan, there has been 20+ years now and still no new real-estate bubble.

Possibly obscure side note: ch_tah doing any galloping lately?

What about the FED Factor ? I think FED is on a mission to devalue dollar/pump up the stock/real estate market.

I don't think any thing can stop the FED at this point. I don't think any political entity will stop the FED. Some of politicians will pretend they are trying to stop this. But they really won't. They all know the inflation is inevitable. That's the only way out of this without the big bank casualties.

Then the question, for a middle class like me, is how does this timing of inflation plays against the future house prices ????

eoulim says

What about the FED Factor ?

What about it?

Economies experience inflation via a combination of "animal spirits" -- confidence in the future -- and the credit cycle converting savings into cash via the exercise of credit.

The Fed is dumping $600B in the banking system -- $100B per month -- next year. If we had a normal credit cycle this new capital would expand into maybe $6T of bank-money as fractional-reserve banking distributed it through the system.

But bank-money is not cash. Every loan has to come from somebody's savings in the bank. It's only when people are parking money in the bank that banks can expand the money supply through lending, as loans ping-pong through checking accounts, into savings, and back out as loans.

But these days, nobody solvent right now really needs to take on any more debt -- there's no demand.

Things were much different with the 2003-2007 credit boom, then, the rising home valuations were liberating $100B/month or so in new cash money as people cashed out their equity and spent it.

http://research.stlouisfed.org/fred2/series/CMDEBT

What the Fed is doing now is just fighting the gravitational pull of a deflationary collapse, since the 2004-2007 bubble valuations are gone now, leaving debt and sky-high under employment.

The situation is highly analogous to the Japan experience. We got a bit ahead of ourselves economically, 2004-2007, and now the bill is due, with interest.

We can't cut government jobs

http://research.stlouisfed.org/fred2/series/USGOVT

that's the only sector that has expanded since 2000.

We can't raise taxes to reduce trillion-dollar deficit since that will drive rich people out of the country or into their secret hideouts and they will stop being the great Captains of Industry we so desperately need.

The end result of all this bullshit is just going to be more and more money moving into the wealthy's pockets and the middle class and below getting entirely screwed. That's the playbook for the next two years, the American people really don't know how crazy-bad it's going to get. We're talking Bachmann crazy here.

robertoaribas says

and what things are going up in price? commodities, not salaries

Plus it will go into asset buys here in the states. Everybody expects CPI inflation to hit here someday, and stuff looks pretty cheap if you've got $500M or more to throw into the market and can wait several years for the inflation man to come.

Social Security Agency's Chief Actuary is working with the following assumptions of wage inflation:

2020 +17.3% from 2010
2030 +30.9%
2040 +47.4%
2050 +65.3%
2060 +85.2%
2070 +106.9%

ie, wages will double by 2070. 20% is about what wages have grown since 2000, but it remains to be seen how sticky these wages are.

Troy says

The situation is highly analogous to the Japan experience. We got a bit ahead of ourselves economically, 2004-2007, and now the bill is due, with interest ....
That’s the playbook for the next two years, the American people really don’t know how crazy-bad it’s going to get. We’re talking Bachmann crazy here.

You seem to contradict yourself here.
If we are tracking the Jap. experience, not much bad has happened to their middle class: in fact, many who couldn't reasonably afford their own home previously got one now and many have improved their living situation beyond their expectations.

So what specifically crazy-bad you expect in the next 2 years? I think the line for next 2 years (not much happening really) is largely fixed by recent elections, and any change (whether good or bad) is delayed till 2013.

Fisk says

not much bad has happened to their middle class

Don't mistake Tokyo for the rest of the country, and don't mistake middle-class "salarymen" for the population as a whole. The employment rate for Japan is at an all-time low, ~56%.

Hours are down, wages are down:

half of women workers are temps.

http://www.stat.go.jp/english/data/handbook/c12cont.htm#cha12_4

I think the line for next 2 years is largely fixed by recent elections,

And that's the problem. The Republicans have this strange idea that stimulus "must be paid for", ie we have to cut government spending somewhere before government can spend somewhere else!

That's a pretty bizarre idea for stimulus. And not being able to raise taxes any more is going to put the entire USD and our sovereign debt rating at some degree of systemic risk a la Greece. Our sovereign debt CDS is already less than pristine now.

Now, I don't know anything really and I'm just talking through my hat here, but I don't think things are going to get any better in the next two years. QE2 might bring us some inflation in commodities, but that's only good for farm belt, and comes at the risk of inflation in energy costs, which the farm belt is highly sensitive to.

http://www.businessinsider.com/qe-and-the-stock-market-and-inflation-in-japan-2010-11

Troy says

Hours are down, wages are down:

So wages decreased by ~10% over 15 years. But RE prices dropped ~2 - 5 times depending on location, right? The RE costs decreased even more drastically, due to lower mortgage rates. Many other prices also decreased, many by 10% or more. I'd beg for a 10% pay cut any day, if 1 M houses drop to 200 - 500 K while the mortgage rate becomes ~2.5%.

Fisk says

But RE prices dropped ~2 - 5 times depending on location, right?

~35%, actually, 1995-2008.

http://www.nuwireinvestor.com/articles/the-state-of-japans-real-estate-market-53959.aspx

from the peak prices, maybe 50% in Tokyo:

I’d love a pay cut of 10% any day, if 1 M houses dropped to 200 - 500 K while the mortgage rate became ~2.5%

The problem with this scenario is you've got to be the person with a job still.　And prices are still pretty whack compared to rents. And Japan is running a national debt at ~200% of GDP, with a declining population, and diminishing competitive advantage vs. China.

I have no idea what's going to happen with Japan this century, but I'd like I've said before I'd rather have our problems than theirs. All our problems can be fixed by taxing the shit out of the rich (like everyone else does) and instituting profit controls on medicine (again, like everyone else does). But nooo, our precious snowflake wealthy people will run off to Paraguay if marginal rates go over 40% again and our doctors will run to Mexico to escape onerous cost controls on their practices.

US Mortgage Applications Hit 4-Month Low - http://www.cnbc.com/id/40230256/

...and before you waste my time making up excuses for it - yes, it IS seasonally adjusted, bitchez.

maxweber says

Anyone else seeing the job market heating up big time? Just ate with a headhunter who said it was hottest he’s seen in six years. Same everywhere?

I can't say for sure about the job market - but I take headhunters' assessment of the job market with a pinch of salt. They get paid for removing you from your current job and 'placing' you someplace else.

As such, their livelihood depends on a 'hot job market' - so many of them have a tendency to let their wishes overtake reality (kinda like home-debtors, but not quite as pathetic)

Troy says

The situation is highly analogous to the Japan experience. We got a bit ahead of ourselves economically, 2004-2007, and now the bill is due, with interest.

I remember japan in around 1990. Things were horrendersly expensive (They still are). I saw some young people cut their own hair because it is so expensive to have their hair cut. I remember there was a big bridge from Osaka to an island. If you want to cross that bridge with your car, you would have to pay $50. Music CD costed $30-40. Movie theater you would need $20 and so on. We're talking about 1990 in Japan !. How much was movie ticket in US around 1990 ? Around $5 ? Music CD maybe around $10 ?

Things were already insanely expensive back in Japan of 1990. Yet typical japanese salary was about half of US salary at the time as I recall. Japanese middle class people could hardly afford frequent visit to movie theaters. They occasionally bought CD's for their favorite singers but they would rent CD's from a Music CD rental places.

I have lived in US for 20 years now. Except movie/cable bills and recntly gas prices, I have been simply amazed by how low inflation there has been in US for the last 20 years (I mean compared to other developed nations).
I think it has been the privillege of US being #1 in the world and having a international reserve currency.

So, in terms of inflation scenario, I have a feeling that US will take very different road compared to Japan of 1990. Up until now, US consumer prices has been very very cheap considering people's income. I think there is huge room for consumer price increase in US, IMHO.

"No, they snap them up to live in them. I’m talking about genuine $900K homes like in Lafayette and Atherton, not $900k jokes that are now selling for $300k in San Bernardino."

True, people who make good money do not live in 90% of the places the general population do.

"The supply of legitimate upper class fortress area homes has barely moved. Lafayette, Moraga, and Orinda all have very strict open space regulations and a subdivision hasn’t been created in any of those towns for 30 years."

True, same amount of homes but more people in the mix.

"In 1980 Lafayette and Walnut Creek were middle class. Homes were (and sometimes still are) typical 1500 sq. ft. ranchers. Moraga and Orinda were upper middle class but home prices were still very reasonable."

True, high income people flocked to Lafayette and not Concord and things went their separate paths.

"The people who can afford $1 million to buy a home are expanding in number. They will very selectively displace middle class areas and keep home prices high. These are the fortress areas and they are very real."

True, employment rate for high earners are around 2-3% Stocks and equity at a two year high. There are more millionaires than ever, to a lesser extent, there are more 200K households than ever.

Agree, these places are bought as primary but invest in the 100-300K ones.

If there is a collapse of housing price, it does not seem to be happening in Silicon Valley except the bad neighborhood of San Jose. Please, someone, prove me wrong.

Nobody says

If there is a collapse of housing price, it does not seem to be happening in Silicon Valley except the bad neighborhood of San Jose. Please, someone, prove me wrong.

Lower interest rates are supporting home prices now.

Graph over past 2 years.

Here's a house I picked out at random:

http://www.redfin.com/CA/Sunnyvale/774-Starbush-Dr-94086/home/669347

Originally listed for $888k, going for the Chinese buyer LOL.

Now listed for $840k. 20% down 4.3% loan shows $3500/mo cash expense (+$400 lost interest), $2600/mo not counting principal repayment.

Doesn't seem out of line to me, really.

Now, should rates go back to 6.3%, the price should be $650 - $700k to meet those monthly expense numbers.

robertoaribas says

“and they all lived happily ever after.” isn’t that how fairytales are supposed to end? Or “Amen” usually that is how you end a prayer! As in a prayer the duck doesn’t get wiped out!

Yeah. He just ignored my point that there are plenty of distressed Multi million dollar homes available here in OC, whether you want to live or invest.

The median price of an Orange County home – or price at the midpoint of all sales – fell to $438,000 last month, housing tracker MDA DataQuick reported Tuesday.

That's the lowest since April and up just 0.3 of a percentage point (or $1,500) from the October 2009 median.
Meanwhile, sagging sales stretched into their fourth month, with 2,298 Orange County homes trading hands in October.
That's 9 percent fewer than in September and 17.9 percent below the October 2009 tally.
While sales typically drop from September to October, last month was the second-slowest for an October since DataQuick began tracking home sales in 1988. It also was nearly 36 percent below the average of around 3,600 housing deals in a typical October.

http://www.ocregister.com/articles/market-276243-sales-month.html?source=patrick.net#ArticleHeader

Since incomes have been flat (ish) for the past decade, median price is just a measure of what banks are willing to lend.

The bottom was and is 2009 and Case-Shiller will reflect it into 2011

Big words for an index is that is only 1-2% above its lows.

Troy says

http://www.ocregister.com/articles/market-276243-sales-month.html?source=patrick.net#ArticleHeader

"Things have slowed down and agents are starting to get worried," said Irvine top-producer Mac Mackenzie. "I think buyer confidence has been reduced, and people are having trouble getting (their loans) approved."

No problem with lending, once prices fall more inline with incomes.

Bay Area Home Sales Fall Sharply; Median Price Dips Below Last Year
November 18, 2010

http://www.dqnews.com/Articles/2010/News/California/Bay-Area/RRBay101118.aspx

Last month the median price paid for all new and resale houses and condos combined in the Bay Area was $383,000, down 3.0 percent from $395,000 in September and down 1.8 percent from $390,000 in October 2009.

robertoaribas says

klarek, same poster who used to frequent zillow under the same name?

No, that's some other rude, realtor-hating "doomer" that I am unassociated with.

The zillow threads have given me a headache. I cannot stand the industry crapola they still spew.

You were the only agent on those forums that would not peddle that crap and actually spoke out against it. As I was trying to explain to our feathered pea-brained friend above, it was de facto realtor-speak to puff up real estate in general with "low rates, buyers market" non-sophistique and it still happens today.

Go look at the graph that accompanies the article. It shows a downward blip in a continuing upward trend following a deep, prolonged and consistent decline. Nowhere in the month old article does it say anything about "HOME PRICES COLLAPSING AGAIN." That is Patrick's subtle addition. More current information, which Patrick chooses not to mention, show a more positive picture. All this phony gloom and doom and wholesale slandering of everyone in the Real estate business except Patrick (who is pretending not to be in the real estate business) is for the sole purpose of selling Patrick's appraisal service. Of course if he scares enough people he will help cause a decline in prices to everyone else's detriment. That seems to concern Patrick not in the least.

Stephen Manion - Realtor, Broker

Mr.Fantastic says

realtor aka Bob Phillips. What are you doing here calling everyone a doom and gloom blogger? Shouldn’t you be busy selling houses?

No he is here looking for buyers. LOL!

realtor says

Go look at the graph that accompanies the article. It shows a downward blip in a continuing upward trend following a deep, prolonged and consistent decline. Nowhere in the month old article does it say anything about “HOME PRICES COLLAPSING AGAIN.” That is Patrick’s subtle addition. More current information, which Patrick chooses not to mention, show a more positive picture. All this phony gloom and doom and wholesale slandering of everyone in the Real estate business except Patrick (who is pretending not to be in the real estate business) is for the sole purpose of selling Patrick’s appraisal service. Of course if he scares enough people he will help cause a decline in prices to everyone else’s detriment. That seems to concern Patrick not in the least.
Stephen Manion - Realtor, Broker

Ok, I have added "Stephen Manion - Realtor, Broker" to my list of people never to do business with. Thank you very much. Are there any other Realtwhores that want to stand up and be counted?

realtor says

That is Patrick’s subtle addition.

No it's not. A reader of the site who goes by the name "HousingBoom" started this thread.

Yes, and you can do so because I always put my real name over my writings. You know, Patrick could probably have gotten a huge amount of business from the between one and two million Realtors out there, surely his biggest potential market, if he made his system accurate and became property licensed to do appraisals. But he has expended a very great deal of time effort and money trying to convince everyone that we are all crooks, liars, and incompetent. A disinformation campaign any modern political consultant would be proud of. How many "never do business with" lists do you suppose he is on. And do you expect us to be nicy nice when he unilaterally declared all out war on us. Who are the only competitors of his valuation business? We are. Coincidence? Surely you are not that naive.

Stephen Manion - Realtor, Broker

Sorry, I figured the Heading above everything to be separate from the posts. My mistake.

realtor says

You know, Patrick could probably have gotten a huge amount of business from the between one and two million Realtors out there, surely his biggest potential market

Well, it is a good thing he isn't a complete sellout, like most realtwhores.

But he has expended a very great deal of time effort and money trying to convince everyone that we are all crooks, liars, and incompetent.

Please don't take credit from your colleagues in the world's (second) oldest profession. It wasn't Patrick that convinced me - it was the dedicated douche-baggery of the realtwhores that I ran into that allowed me to form this opinion.

How many “never do business with” lists do you suppose he is on. And do you expect us to be nicy nice when he unilaterally declared all out war on us.
Stephen Manion - Realtor, Broker

Ah - so you are a bully too. Keep talking - I think you are doing a better job of smearing mud on yourself.

realtor says

Go look at the graph that accompanies the article. It shows a downward blip in a continuing upward trend following a deep, prolonged and consistent decline. Nowhere in the month old article does it say anything about “HOME PRICES COLLAPSING AGAIN.”

As it relates to the Bay Area.... its a long correction, as some call it a crash.

As for South Miami.. :) By all means its a better time to buy...

realtor says

Who are the only competitors of his valuation business? We are. Coincidence? Surely you are not that naive.

I was running the housing crash site for four years before I thought of making a business out of comparing rents to prices.

So my dislike of realtors goes back a long way, and the business is just something I came up with that seemed to be on topic and useful. I still can't pay my rent with the little money I make from the site. So it's just been a labor of love (or hate, as you wish) for the most part.

I had such consistently bad experiences with realtors that I don't think I can ever be convinced they are on the buyer's side. Their financial motive is to trap people in as much debt as possible. That's how they get paid. More debt = higher commission. No purchase = no commission. So the buyer's agent has the opposite financial interest from his client. A built-in conflict.

It's a lousy business because of the way it's structured. If realtors were hourly I'd have a lot more respect for them.

Dear Stevie,

REturds suck dirty butt.

Regards,
Wyle E Coyote - Genius

it is absurd that reWHORES get paid based on sales amount. Absurd.

Perhaps in regions of the country where prices didnt inflate or crash we may find more
honest realtors, but where we have (had) highly inflated prices well above the norm,
realtors look at every home as a commission making machine. The ends justify the means
to pinch that extra $10K in commission. $1M sales gets you $60K right off the top.
Of course realtors want to keep prices inflated.

But this is what happens when you have a shift toward 'service economy'.

It’s a lousy business because of the way it’s structured. If realtors were hourly I’d have a lot more respect for them.

Realtors are commissioned salespeople.
Not inherently better or worse than others (autodealers, travel agents, and nearly all store sales clerks whose pay is at least partly based on commission). No one bashing realtors here has ever had a commissioned sales job?
Restaurant waiters and barmen mostly live from tips, which really is a commission on sales. No one here worked that in college?
Further, income of any business owner (including a doctor or dentist) directly depends on how much he sells. No one in that category?
For SW and other engineers, govt. contractors are commonly paid "cost-plus", meaning your profit is a fixed percentage of cost - the more it costs the client, the more you get. Nobody been on a govt. contract, either?

Neither me nor anyone in my family is or have been a realtor. But I'm against bashing them simply for the fact that their income is in proportion to the sales volume.

Fisk says

No one bashing realtors here has ever had a commissioned sales job?

Steering somebody into a nicer pair of shoes than they originally wanted is a *bit* different from roping them into a suicide loan on an $600,000 property that was going to collapse to half that in two years.

http://www.youtube.com/watch?v=Ubsd-tWYmZw

Troy says

http://www.youtube.com/watch?v=Ubsd-tWYmZw

I had viewed that long time ago, of course. The only one actually seen "roping" here is the wife, any impropriety by Suzanne is merely surmised. This flick is rather an indictment of wives and warning about marrying with care or not at all than an indictment of realtors and warning about bying overpriced RE.

Do you think that wife's extortion has been limited to a house, and not involving cars, jewelry, furniture and what not?

Fisk says

any impropriety by Suzanne is merely surmised

"Suzanne researched this!"