patrick.net

Move to Encino/Tarzana buddy. We have tons of houses out here with signs, have been there for a while.

Here's a refresher course, kids:

http://www.realtor.org/wps/wcm/connect/5e37be0045ba291385f5c7342c47dc89/REL10Q4T_rev.pdf?MOD=AJPERES&CACHEID=5e37be0045ba291385f5c7342c47dc89

Median U.S. price 2010: $173,200

http://docs.google.com/viewer?a=v&q=cache:ikHrBAiDn4YJ:www.realtor.org/Research.nsf/files/MSAPRICESF.pdf/%24FILE/MSAPRICESF.pdf+median+home+price+2006&hl=en&gl=us&pid=bl&srcid=ADGEESj7ef9duPjkETtV23kQUzlSNbvtWugxV8aDLaZAVUcTWx3_oeohxxDEhDkWwx3oFN50z1cAEC0xZHBCVg-kzL7C-5A6o2TtI52SCF8wRYOLZt94Vi4RCNALU7we3ugD6vt7WQB_&sig=AHIEtbSLXeDzjGeamK_If0PGrLXvdgxiSw

Median U.S. price 2006: $221,900

Any questions?

I don't think the trend is toward bigger homes, I think it's the reverse. With the aging population, people won't want bigger homes, they'll want smaller, 2 or 3 bedroom homes.
When you're in your 80's, a smaller home with no stairs is easier to get around in and clean. And a smaller home is also cheaper to heat in the winter.
Since there will be more older people in 30 years, which size homes do you think will be more popular?

waiting_for_the_fall says

Since there will be more older people in 30 years, which size homes do you think will be more popular?

A big house so the family and extended family can live with the aging Matriarch and or Patriarch.
To help with health and cleaning and general upkeep. Much like it is in Asian countries.
"I think we might be all turning Japanese I said I think so..."

Or Chinese at least.

Fisk says

Russians are buying. They can’t be wrong!

The Russians are coming. The Russians are coming. Quick, buy everything you can. Bid at least $100K over the asking price. Remember, house prices always go up.

I tend to think the article is right, "in the future". But I also think that, with the still huge number of pending foreclosures, in-limbo inventory, boomers downsizing, immigration much restricted, mortgage lending much tighter, and new college grads graduating later and eyeballs in debt, that future of major new housing appreciation cycle is much further away than portrayed. Say, more like a decade than year or two.

As to renting out, yes that could be quite profitable for suitable properties, mostly multi-family complexes and townhouses. But most larger SFH are not in that category, at least in our area.
A neighbor of mine used to buy and rent out SFHs since 1970-s, but sold them all a few years ago and now owns apt. complexes only. He tells me that is a much better and easier business.

dunnross says

Fisk says

Russians are buying. They can’t be wrong!

The Russians are coming. The Russians are coming. Quick, buy everything you can. Bid at least $100K over the asking price. Remember, house prices always go up.

What ever happened to the rich Chinese or Indians that were supposed to be buying up everything ? Anyway, so far ONE deal which made the headlines and the bulls are still full of it. And that Ruski isnt even gonna move to the Bay Area. I guess next it will be Japanese Billionaires escaping Tokyo.

APOCALYPSEFUCK says

Extraterrestrials are well-known savvy property speculators and recent UFO activity in the west indicates they’re here to BUY and buy big. The smart investors will get ahead of the space ships and clean up!

Kind of investors that only you could imagine. I guess after the earthly RE fiasco we need em!

I feel like I'm changing my mind every single day whether to take the leap off the fence this summer or not....

swebb says

Your example demonstrates how median values can be skewed, but it’s a toy example and I think it can be controlled for. I also agree that the median will be skewed depending on which segments of the market are active. It’s good to be aware of the pitfalls of using median prices, but I think they can still be helpful if used carefully. I try to do a few things:

1. Use a “large enough” sample set to avoid the problem you illustrated.
2. Filter the data to similar houses, similar area (same neighborhood, 3 bedrooms, e.g.)
3. Control for different house sizes by looking at price per sqft.

It’s not an exact science, but I think it has some information content.

Very well said.

I like the Los Altos charts because they include a ppsf chart, and they show a 7-day average juxtaposed with a 90-day average. The 90-day average gets rid of the noise in the data by averaging it over a longer period of time. It's not perfect, but it's certainly useful.

Thanks for the comments everyone!

Anyway, I love these real life experience posts...

OK.....those of you that want to pound on the table and use data and charts to prove a price point will ultimately lose the game. Those of you that pretend that you are Realtors are setting yourselves up for a negative fall. RayAmerica's comments about Realtors and offers are 100% accurate. The secret is easy.........find the best agent in whatever city you are looking in ( try Council of Residential Specialists directory ) based on sales activity in the exact market you want. A SUPERIOR agent can manipulate data that is only available to practicing professionals to produce market analytics and sales trends down to City, neighborhood, street, square footage, development, whatever. Shelf the median and average B.S. and get real numbers. Then flag the filtered criteria with instant notifications to you and your Realtor. Then work the database for any units in pre-forclousure via the Public Information available to the same professionals. That will give you the current lien holder or servicing agent. It's not an insider beating you to the punch, it's usually the ignorance of the Buyer. Did I mention that a SUPERIOR agent does all this for you?

jeffspaur says

A SUPERIOR agent can manipulate data that is only available to practicing professionals to produce market analytics and sales trends down to City, neighborhood, street, square footage, development, whatever. Shelf the median and average B.S. and get real numbers. Then flag the filtered criteria with instant notifications to you and your Realtor. Then work the database for any units in pre-forclousure via the Public Information available to the same professionals. It’s not an insider beating you to the punch, it’s usually the ignorance of the Buyer.

Unless there is information that the agent is privy to that I am not, there's no case he can make with anecdotal or aggregate data that I couldn't do (and do better) myself. If there's something he's looking at that I am not, then that is because the game is being rigged by a cartel. You're essentially saying that this is the case, but I for one resent the "go with the guy that has the secret numbers if you don't want to get screwed" justification for having to use a realtor.

SubOink says

In general, are pools really that troublesome? (when you are renting the house out) - can’t you have the tenants sign a piece of paper that waives your liability?

Not in CA. Legal system does not recognize certain waives of rights/responsibility. This is one of these items.

Good article. These NAR guys sound like that ahole from the 80's who used to sell a book on "Secret to becoming rich". Forgot that guys name, but sounded about the same.... total BS and nothing more. As always same old selling lines.... buy now or be priced out forever, others are doing it so jump in before its too late.

I called agent and offered 100% cash for asking price. She said “don’t bother, you’re not going to get it.” Huh?!? High possibility of agent cock-blocking on this one as she did her best to talk me out of being interested.

Realtor wants to see it to someone they know for well below asking price so that they can flip it.

Mr.Fantastic says

I have followed Reggie for the past 2 years. This guy kicks Case-Shiller all over the place. This guy is the anti-Lawrence Yun, because he actually understands the market based on fundamentals.

It's hard to believe Yun has a PhD. NAr just combs through a field of credentialed Economists and finds the one that's willing to sell his soul to help the cartel fuck people over. And Yun is their guy.

Three Bays says

- If you’re going to look at trends for the median prices, the least you need to do is adjust them for seasonal variation. As someone pointed out, these graphs oscillate with season, so if you don’t adjust for that then forget about any comments about what’s up or down or preceding what.

So you can't look at this chart and identify that prices have gone down in Concord over the last year? Is that all a "seasonal variation" that lasts for a year?

shrekgrinch says

ch_tah says

That doesn’t even make sense. You can’t be underwater if you buy with cash.

Not my prob if your reading comprehension skills suck.
If you buy a place for cash for $100,000…and in the future it is valued at $90,000…then you are underwater by $10,000. If you sell it at that market price, that ‘underwater value’ converts into a real cash-loss of $10,000.

It is your problem if you don't know what underwater means though.

shrekgrinch says

ch_tah says

That doesn’t even make sense. You can’t be underwater if you buy with cash.

Not my prob if your reading comprehension skills suck.
If you buy a place for cash for $100,000…and in the future it is valued at $90,000…then your investment is underwater by $10,000. If you sell it at that market price, that ‘underwater value’ converts into a real cash-loss of $10,000.
What is the comprehension problem here, exactly?

My understanding was that when referring to houses being "underwater," it usually means that the person owes more than the house is worth. Hence, if there's no mortgage, you can't be underwater. If you use a strict economics definition, it can mean a price lower than the purchase price, so the statement itself isn't completely nonsensical, although the theory that cash investors are going to rush to sell because the value of the house has dropped 10% seems a little sketchy and completely ignores the fact that the house may be cash flow positive where the investor isn't concerned with a temporary drop in principal.

And San Diego....

Once again, it seems that that sharp uptick in asking prices didn't actually happen.

I can only guess that the spikes being shown in current charts are likely to mysteriously disappear as well.

If I were a banker holding the 2nd, I wouldn't give up claim on payments just because the bank with the first did a write-down. I would want to force the homeowner to either give up the house or make payments to insure that I got the most value out of the loans. If it is in the owners and 1st holder's interest to do some sort of write-down agreement, then they should have to pay off the 2nd or make some deal with the holder of the 2nd.

I think no one truly knows exactly how DELUSIONAL sellers right now are.

Not only sellers, but *some* landlords as well.

As to the sellers...I posted a thread on city data forums in the Los Angles section about LA real estate. Much much much defensiveness from homeowners...almost like they are all relying on their home as their retirement plan(which is probably the truth). A TON of denial and every excuse in the book as to why LA county real estate can't possibly fall further.

As to landlords...I live in downtown LA. I got into my loft late last year when they were still running incentive. Prime prime prime location, older building(but renovated with modern kitchen and upscale furnishings), no pool, includes gym Gold's membership, water, trash, also a $1000 gift card at move in. 850 sq ft, $1550 per month after incentives(2 mo free on 14 month lease). At the time, this was the only smaller unit available(theres also 650 sq ft units but again none available). Only one larger unit available and anything that they had available went within 5 days. Fast forward today and all incentives are gone. I think its cause the same size unit in the newer and more upscale market lofts runs around $1900/mo and in the upscale Watermarke building, a 850 sq ft unit is $2500/mo.

Now some explanation about Watermarke...opened a while ago and supposedly completely rented out at the time(cough...bull-----sh--). One problem. The buttheads there are now spamming craigslist like mad. Really, who thinks there are THAT many people who make $125-130K a year and don't have families(very very few families downtown...I think maybe 5 in my entire building, all with children under 5...less than school age).

In short, I think Watermarke was lying about being full. I call shennanigans big time. Same for market lofts. And guess what...now my building...which was as close to 100% occupancy as one can get is not only having available units, but also is having many people trying to break lease...at the new rates, not the discounted one.....Anyone out there want to guess what the next thing to happen to this market will be?

And to add further fuel to the fire...theres several buildings near Staples that were trying to capitalize for a couple years on proximity to Staples and LA Live. Rates were stratospheric IMO....$2K a month for 500 sq ft. FAIL! A few of those very upscale nice buildings have dropped their rates into the same range as the new rates at the building I am in. I *knew* this would happen eventually, I'm just very surprised it happened all within a 3 month period.

Point of all this....

1.) List prices are irrelevant and just ridiculous as an indicator of anything. Could be more expensive properties comming up for sale. Could be loony sellers.

2.) The BS being spewed about rising rents is just that..BS. Hoping and wishing do not make things so, despite real estate agent assertions to the contrary.

Not good.

Good observations MarkInSF. Redfin was showing spikes that weren't really there on all those graphs.

Suffice to say, there's a good chance the spikes shown now will also be corrected, but some suckers will be fooled to "buy now before it's too late!".

This video explains some of the charts.
http://boombustblog.com/reggie-middleton/2011/02/24/further-proof-of-the-worsening-of-the-real-estate-depression/
Check around 12 minutes in.

He is using total sales (volume * price) as a leading indicator for case shiller. I don't get the US / Japan comparison though. His chart shows the US bubble as much bigger than Japans. IIRC, Japans was bigger than the US's based on an article by Reinhart & ? on property bubbles over the last century or so.

I'd say that is considered high combined income by any standard, but individually may be a bit low, depending on your responsibilities, education and the size of the company. Additionally, if you are management, the number of the staff you oversee and the industry you work in.

Have you been to salary.com?

No one answer; it will just depress me.

10-15 years in mgmt $110-115K is about right. The same is true for other functional positions, marketing, sales, finance. But you have to be at the right place at the right time.

Dual income families have been around for some time in SV. Nothing new about that, but
not the factor some say was the driver of the current bubble or that will keep prices inflated.

Overall today, high salaries may be considered more of liability since we as a local BA employees starting to compete with other lower cost regions. Our $115K per year vs. 75-80K theres in other states.

A good research aid is the Bradford Salary Guide which many HR departments use as guide in setting salaries.

"high salaries may be considered more of liability since we as a local BA employees starting to compete with other lower cost regions. Our $115K per year vs. 75-80K theres in other states. "

Competiting with other states? No. Try competing with other COUNTIRES. You are competing with $15,000 a year software engineers in India. Your also competing against all of the H1-Bs.

Competing with India wages in IT didn't work, we need live awake able bodies at 2PM Eastern, when it's 2AM in India during meetings. It was a rough year, in '02 where virtually every position in my part of town anyway, was outsourced to India. Now there's always positions available and I'm always busy.

Now if Mexico were to ever get their kids to study hard and learn computer science, then we would be in big trouble.

HousingWatcher says

Competiting with other states? No. Try competing with other COUNTIRES. You are competing with $15,000 a year software engineers in India. Your also competing against all of the H1-Bs.

That is also so true. Recently PolyCom is moving from East Bay down to San Jose. Oddly they are moving and consolidating only 350 people locally out of 3200 global. And this is typical.
Symantec has 1400 people in SV out of 17,000 global, and so on and so on. Today is much different than back in the 80s-90s.

Tenouncetrout says

Now if Mexico were to ever get their kids to study hard and learn computer science, then we would be in big trouble.

Believe it or not! Both Equador and Argentina have been building out large IT/IS over the past several years now. Historically both Chile and Agentina way back in the day were heavy users of past tech products (Mainframes) in many of their industries, natural resources, banking, and government. Today they are growing and spending much faster.

Anything is good as long as your employer has not thought of hiring 5 guys in India to replace you.

Allow me to explain:

The best way to find out is to go interview at a few companies and pick the highest paying job. Whatever job you can land with the highest package gives you a good salary that is unique to your skill sets and circumstances.

OO, How is Perth treating you? Have you unloaded any of your position?

I have a brother-in-law that runs a small gaming company and everything techy is done in Argentina.

I wonder how much longer NBC's morning news show will be able to sit next to Barbara Corchoran (sp?) with a straight face, as she talks about the "bargains" available around the country? Of course all the networks probably have their resident shills, but that's the one that pops into mind.

Hey guys, Tim Ellis from Redfin (and also Seattle Bubble) here.

Thanks for catching this.

We've dug into the jobs that generate these charts and figured out that the way we are calculating the list price per square foot has an error that affects the price we display on the chart for past dates. The current point is accurate, but the past points are being incorrectly adjusted downward, resulting in the upward tilt toward the end of all the charts.

We're working on a fix, but at this point I can't say for sure when it will be live.