patrick.net

New story - MSNBC: "Housing inventory spikes in 'burbs"
http://tinyurl.com/9rjfc

"Buyers are taking advantage of the increased inventory, waiting longer before they make their offers and hitting more open houses. Sellers, meanwhile, many of whom are trying to cash out near the height of the market, are growing increasingly frustrated as their houses sit on the market for weeks and months.

Sellers traditionally are slower to realize when the market is changing, usually because their information is more dated than buyers'."

Denial: My million-dollar stucco $hitbox will continue to appreciate 20% YoY forvever. There is no Bubble!

Anger: What's the matter with these people! Don't they see the PIBs of my $hitbox?

Bargaining: Well... maybe I could lower the asking price... just a bit.

Depression: I've already lowered my asking price three times --to ONLY $850K (*sob*)! And still no buyers --I just don't understand!! Sure, I only paid $600K, but STILL....

Acceptance: I guess $1 million was a bit too much to ask for a 600 sft corrugated steel shack under the freeway overpass. But it did have granite countertops...

That's precisely what happens when you put all your eggs into one basket. Funny how homeowners accuse renters of being angry, jealous and bitter when THEY are the ones with the sense of entitlement regarding the worth of their property. Perhaps buyers are FINALLY saying enough is enough - it's about freakin' time!

(Novato was a little town with a few subdivisions carved into pear orchards and Highway 101 only had two lanes in each direction, and had the only stop sign ON the highway between SF and Santa Rosa.)

What do you mean, Jack? I do not remember having to stop on 101 driving frim Santa Rosa to San Francisco. Do you mean Novato only hase at-grade intersections (no on/off ramps)?

Now I am a bit sacred. I thought we would have until October to build speculative positions and I have been a bit lazy. It appears that many local markets are in the early stage of popping. Looks like I will have to "trade now or regret about not profiting from the bust forever.". :)

Since then, whenever I hear one of my friends making an offer a house, I send them this link and their reaction is always some sarcastic, “thanks a lot!”

What? Are you saying they don't appreciate your friendly offer of help and enlightenment?

What? Are you saying they don’t appreciate your friendly offer of help and enlightenment?

Usually, people just think that somehow you cannot get a loan for a house (e.g. cannot fog a mirror) and is bitter about that.

Jack--
Interesting yarn! Good to see how your experience/knowledge gives you optimism in Marin (my hope as well). I have so little of that, as we're recent transplants to the county, and could use good advice. I'm a "frustrated architect" here as well--I did the tour through art school too! One outlet to my frustration is to eventually buy some land (doubtful here in Marin), and design/build a home of our dreams.

Btw, I was wondering –since you’re an artist, could you paint or draw something that expresses your vision of the housing bubble? Maybe a nice watercolor of a sea of McMansions all with Realtor signs and Escalades parked in the driveway, extending to the horizon? Or a portrait of a Speculator with bulging suitcase full of NAAVLP money, salivating with greed over FTB/victims?

And when you’re finished, we could scan it & post next to “Mr. Bubble” on Patrick’s link site. Just an idea…

Jack, I'm serious about this --what d'ya think?

Since then, whenever I hear one of my friends making an offer a house, I send them this link and their reaction is always some sarcastic, “thanks a lot!”

Gee, doesn't that sound familiar...
Just yesterday, visiting my sister and husband, they announced they're planning on buying a second home in the C. Valley as a "college nest-egg" for their infant son.
I'm no financial expert, but I raised concerns that it may be hard to cover the mortgage, possible RE overvaluations, etc. The "bubble" didn't seem to concern them at all.
I'm no financial expert, but isn't it more financially savvy to skip buying the house and direct that money towards more stable, long-term investments?

I’m no financial expert, but isn’t it more financially savvy to skip buying the house and direct that money towards more stable, long-term investments?

It is foolish to rely on a highly-leveraged investment to attain a future financial goal. Leverage is about possible upside above and beyond necessities.

Jack,

Actually I wasn't thinking about a cartoon/caricature, but more along the lines of fine/representational "real" art. Maybe an avant-garde Picasso-esque interpretation of a speculator. Or, a realistic or impressionistic landscape of McMansion sprawl.

But... if your "neutralistic" leanings make this impossible, I understand. ;-)Maybe you could make it a class assignment for your students this fall ("Impressions of the RE market")? And don't worry about scanning/photoshopping --Peter or some of the other BA bloggers can handle that.

I'm a 31-yr-old writer renting in So Cal with two preschoolers at home, and I've been lurking on this site for about 6 months. I've only ever posted once before. My husband, an army officer, is a native San Franciscan who wants to return to the Bay Area in about 5 years to be near family and friends.

I became interested in the housing bubble when, last winter, our inlaws tried to convince us that we needed to buy a house in the BA then and rent it out until we were ready to move there. They had this 1.2 million dollar *major* fixer-upper in San Mateo in mind for us, and we began to wonder if the whole state had gone crazy.

In desperation, I googled "bay area housing bubble" and came up with this site, which I've been visiting regularly ever since. I've sent links to it to all of our BA friends and family who've expressed interest in buying second-home investment property there in recent months, and none of them have seemed convinced of anything other than that real estate is a sure investment bet. Sigh.

So we're sitting back hoping that in 5 years, we can buy a modest version of our dream house in the Bay Area, and if not, we'll go elsewhere and buy a much nicer house in some other nice place.

My interests are digital photography, jogging, and lately blogging. And I love, love love traditional architecture.

This just in...

CNN Money: "Banking on illegal immigrants - Banks are seeing an untapped resource in providing home loans to undocumented U.S. residents" tinyurl.com/btn9a

From CNN illegal immigrant mortgage article:

"Despite heated political debate in Washington over illegal immigration in the United States, an increasing number of banks are seeing an untapped resource for growing their own revenue stream and contend that providing undocumented residents with mortgages will help revitalize local communities."

Great idea! Hey, maybe there are some other "untapped resources" out there for growing the "revenue stream"? Like providing loans to sell crack to school kids, or financing a brothel for your wife/daughter. Maybe that will help "revitalize" the local neighborhood, too!

There's just no end to the "creativity" possible...

I've posted a couple of times. I'm 37 and bought my house in 97. I've watched this bubble with alarm and thought it would pop shortly after the the dot com burst. I did not see rates falling as low as they did.

After my favorite bubble site (www.itulip.com) stopped its updates on real estate after calling the RE bubble in 2000, I searched for another and found the early version of Patrick on Google (typed in Bay Area Housing Crash!). Most folks dismiss my views as crazy but they did in Oct. '99 as well.
My views are less extreme than his and I think (hope) prices will revert to the 1999-2002 timeframe if there is a lending crunch.

I'm originally from India and enjoy all that the Bay Area has to offer.

I have also been lurking here for a short time. ;-)

After working almost 30 years in the SV high-tech field, I am moving on to my new career as an attorney practicing construction law. I figure that I may have a thriving business from the people who have purchased homes with construction defects.

I spent 30 years working for companies like Intel, ROLM, IBM, and Cisco. I think that industry will never see significant growth again.

My daughter who just graduated from Northeastern wanted to get an EE or CS and I said NO! Instead, she took my advice (I wonder why?) and received her degree in biotech.

She got her first job in MA., working for Wyeth Labs as a Jr. Scientist.

My point is that SV is becoming the next Detroit. Even the CEO of Oracle has made this statement.

Why would anyone want to buy an overpriced SV shack is beyond me, when the jobs in high tech don't support the kind of income

My point is that SV is becoming the next Detroit. Even the CEO of Oracle has made this statement.

Larry is not my favorite but I have to agree with him this time.

BUT, what about all of those "Silicon Valley is making a COMEBACK" stories I've been hearing for over a year now?

I have a friend who works at Oracle and he's been waiting for the pink slip for awhile. He says they're planning on outsourcing thousands of jobs in the near future. I hear this pretty regularly about HP and Intel as well, and this area is already starting to see some HP layoff's. It's funny, when I graduated college, everything was tech. All the new college graduates were so smug at the number of jobs availiable in their field and we'd always hear them say they wouldn't take an entry level job for less than $40K a year. I find it real hard to have sympathy for those guys now that they're scrammbling for jobs. If they managed to make the transfer to RE, I'll have even less sympathy for them since they're the one's that helped create the RE mess.

BUT, what about all of those “Silicon Valley is making a COMEBACK” stories I’ve been hearing for over a year now?

I heard that Detroit is making a comeback too, with those weird-looking semi-retro vehicles targeted towards the almighty boomer generation.

SactoQt, I believe Oracle's plan is to offshore most technical jobs. They have an impressive "compound" in India with room to grow.

So in other words, all those PeopleSoft people in Pleasanton who were offered jobs with Oracle back in January now have a false sense of security?

My friend who works at Oracle has met some of his Indian counterparts and he says they're way more educated than we are, and willing to work for far less. Some people seem to think only manufacturing jobs are getting outsourced, but there are a lot of brilliant people willing to work twice as hard for half the income. We should really be paying more attention to this.

Let me add, I believe most large companies will plan to offshore most technical jobs if at all possible. There are really very few reasons for them to keep jobs here. They must also offshore some middle management positions though.

I think anyone working in tech right now may have a false sense of security.

Yea, though I walk through the [Silicon] Valley of the shadow of death,
I will fear no evil: For thy Realtor art with me;
Thy broker and thy staff, they comfort me.
Thou preparest an auction before me in the presence of mine bidders;
Thou annointest my head with oil; My cup runneth over.
Surely goodness and prosperity shall follow me all the days of my life,
and I will dwell in the House of Eternal Appreciation forever.

There are literally millions of people out there (India, China, ex-Soviet bloc, ...) with equal or better technical skills that are willing to work for a lot less. Some of them are perhaps disadvantaged at this point in time because of language or cultural issues. However, many of them will overcome these issues shortly...

Harm

I'm speechless.

Harm,

Thou sayest

".Yet ah! why should they know their fate?
Since sorrow never comes too late,
And happiness too swiftly flies.
Thought would destroy their paradise.
No more; where ignorance is bliss,
'Tis folly to be wise."

--Thomas Gray
Ode on a Distant Prospect of Eton College

GP

Thanks for your input. I had no idea so many industries outsourced.

Any job that can be outsourced will be outsourced in the long run. It is a crime against Capitalism not to pursue the lowest possible costs. This is quite sad.

Yes, but salaries in India are growing very fast. Good experienced software developers are now $30-$50K in Bangalore, and some IIM graduates are getting offers of over $100K from US investment banks for offshored financial analyst jobs in India.

Face Reality, until their salaries catch up with us, there will still be incentives for companies to offshore jobs. On the other hand, the salary differential between the median tech worker there and the median tech worker here is still very significant. The future of such median workers is not to be ignored because they are the majority.

And even those top people are earning about one-third or one-fourth of their US counterparts. A good software developer earns about 90K to 150k. A financial analyst can earn as much as 400K, according to MarinaPrime.

Jack--
I would've like to see Marin in the 70s and 80s. I'm sure the place had a lot of charm--and still does--despite some moneyed overdevelopment. Although my intro sounds admittedly a bit like a cyber greed-head, we moved to this area to escape that culture and live amongst water, wildlife and Mt. Tam (some of those intangibles that draw people here). This place reminds me of Puget Sound a bit, which is still my favorite place on earth. I think our hometowns will always have something nowhere else can replace.

So you teach art--K-12 or college level? I've considered teaching a computer art/design class somewhere, but haven't yet looked into the process of getting there.

Btw, HARM--I'm a bit of a photoshop 'guru' (or so they say). Maybe in an inspired moment, I can throw together a visual commentary on the bubble.

Among other things, I have served the “evil empire” and was part of the Core OS team that wrote Windows 2000. So you know who to blame when you get the BSOD.

It is all your fault! ;)

Uhhhh....!
http://tinyurl.com/bszru
(no explanation required)

So why are you not already back living in Puget Sound? If you love the area, and can make whatever trade offs you need to make, why wait? (Or is there “the REST of the story”?)
Well, I do like Marin, we have family nearby, and decent jobs. Our home here gives us access to a lot of things we love--kayaking, nature, a healthy environment. If we couldn't afford living here, I might feel more inclined to move. As a substitute to moving, I was considering a vacation home up there--and that's how I found this site. Researching things out, I've concluded it's best to wait, and not extend myself financially for now.

Ptiemann...your name rings a bell...where you once a contributor to Epinions.com?
I still drop by there time-to-time; I've met a lot of cool people there.