patrick.net

corntrollio says

Papers like the LA Times and the SF Chronicle give even more granular zip code by zip code data compiled from DQ, which is quite helpful sometimes.

I found that the SJMercury very often leaves out the zips and provides far more rosier comments than DQnews.com. Local papers comments are much more biased than the raw data.

corntrollio says

The problem is that you're not even making a plausible argument about distortions. For example, during the boom, "investors" were buying cashflow negative properties by bidding them up far above a reasonable asking price because they expected massive appreciation and they got cheap loans. This was a huge distortion. What you're talking about is not a distortion based on the numbers you have given. Instead you're complaining that people are doing perfectly rational economic things!

The problem is, now everyone on earth thinks that they need to be a real estate "investor" to get rich quick. 10-15 years ago most people were buying homes to live in and raise families, a few people with extra money sometimes bought primarily multi-family units, or kept old homes and bought new ones, turning their paid off homes into rentals. There were maybe a couple rental in our neighborhood when I moved in in 1998, and they were owned by families that had them in their family for many, many years. Now? nearly every home in the neighborhood that comes up for sale is bought by an "investor" as a rental, at prices 80-100k more than the homes were selling for pre-2000.

Tude says

People really did "get rich" doing nothing but flipping houses and extracting large amount of equity

Fundamental laws of economics suggest that not everyone can get rich. Period. It is possible if there is surge in buying of those same properties by future generations. I don't see that happening with rise in income nowhere in sight. If there is no dramatic rise in income than there has to be something else like 0 down or 0% mortgage, back to good old days of NINJA loans. House prices has nowhere to go but down for years to come.

corntrollio says

Is it that a lot of that money poured in by VCs (and by retail investors daytrading tech stocks) stayed in the local region? That's certainly believable.

yes this is the point. lots of funding drove hiring, incomes, rents from early 90s to late 2000. But it was short term only. In many ways we should of corrected for the anomoly we saw by late 2001, but RE prices still increased while rents declined, as did incomes, and number of employers. Fairly large disconnect from fundementals.

thomas.wong1986 says

But it was short term only. In many ways we should of corrected for the anomoly we saw by late 2001

Thing is, I know plenty of people who cashed in 1997-2001 (and 2006-now at Apple & Google) and no longer have to work. There really isn't that much supply in the Valley.

Then you add in the non-tech upper middle class professionals who also have to live in the nice parts, that stresses supply even more.

There are 64 houses on the market in Los Altos. How many potential buyers if the price was right? 640,000?

Tude says

The problem is, now everyone on earth thinks that they need to be a real estate "investor" to get rich quick. 10-15 years ago most people were buying homes to live in and raise families,

There was lots of speculation on CA RE back in the 80s, but that ended badly for many by early 90s. Who can forget Tommy Vu

http://www.youtube.com/watch?v=iQNdi-fRExc

thomas.wong1986 says

In many ways we should of corrected for the anomoly we saw by late 2001, but RE prices still increased while rents declined, as did incomes, and number of employers.

Yes, that's noticeable. We basically substituted one bubble for another.

Tude says

The problem is, now everyone on earth thinks that they need to be a real estate "investor" to get rich quick.

Maybe we should agree to disagree, but that's not what you're describing at all. I gave an example of distortions in the housing market that caused wannabe investors to get into the market because they thought they could get rich quick -- the recent housing bubble. What you are describing is perfectly rational economic behavior. These people are true investors who want to get rich slowly -- by having good fundamentals in their investments.

There were maybe a couple rental in our neighborhood when I moved in in 1998, and they were owned by families that had them in their family for many, many years. Now? nearly every home in the neighborhood that comes up for sale is bought by an "investor" as a rental, at prices 80-100k more than the homes were selling for pre-2000.

If this is indeed true, then it's possible a change has occurred in your neighborhood. This happens. The best example I can think of is Noe Valley in San Francisco. It used to be a blue collar-type neighborhood back in the day, but now has gentrified and has quite expensive homes. Sometimes demographics change.

But again, what you are describing is rational economically. I understand that it's frustrating, but that doesn't mean that it's improper or that perception about housing changed the way you're saying.

If anything, it means that perception changed for the better because the real investors are back and are looking for good fundamentals, as opposed to the amateurs who never looked at fundamentals and basically just speculated.

Tude says

I wonder if the real estate bubble has juts permanently perverted people's ideas about it, everyone wants to get in on the next bubble early this time, they are all so sure it will skyrocket again soon.

I'd believe this only because I still see this type of mentality. I'd look at it in a few different ways. The bubble- no doubt- was the biggest bubble we've ever seen. It effectively priced out a lot of people- people like me who make good incomes. This in turn has probably caused a lot of people to fear that they'll stand the chance of being priced out again if they don't buy something- anything- they can afford now. At the same time there is still a whole ton of people living in places like the Bay Area who still believe in the " We're special!" mentality.

As far as investors, well there's an awful lot of fly-by-night get rich quick seminars for everything and anything. People are easily manipulated and convinced of various investment schemes- virtually any kind except for those that make financial sense. Thus why you have a ton of real estate investors who are so eagerly buying up bottom-feeder crap and paying a huge premium for houses that should sell for way less than their all-cash offers.

Troy says

Thing is, I know plenty of people who cashed in 1997-2001 (and 2006-now at Apple & Google) and no longer have to work. There really isn't that much supply in the Valley.

How many do you really know? If there isn't enough supply, then wages should go up in order to compensate, which could push houses back to fundamentals.

Troy says

There are 64 houses on the market in Los Altos. How many potential buyers if the price was right? 640,000?

Isn't this true of anything?

Troy says

Thing is, I know plenty of people who cashed in 1997-2001 and no longer have to work. There really isn't that much supply in the Valley.
Then you add in the non-tech upper middle class professionals who also have to live in the nice parts, that stresses supply even more.
There are 64 houses on the market in Los Altos. How many potential buyers if the price was right? 640,000?

The point is they sold ... way way way overpriced paper (stock) for real cash.. and bought into LA, at someone elses expense.
The motto for overpaying back then was .. "it didnt matter because it was free money anyway, and I have more where that came from!" Do you also remember that? I do!

Are you willing to spend $60K or more to buy a condo with a shady HOA? Does it make economic sense? If the answer to both of those questions is not yes, walk away.

If I'm misunderstanding things, what are your concerns here? Did you fall in love with the property and now don't want to let it go? Or are you asking because you are just curious or if you want to know if anyone has seen this before?

Plenty of shady condo dealings happened during the recent boom. It's no surprise that you're seeing some of it. If I may ask, what region?

gbenson says

some screwy stuff going on

gbenson says

if we would like to raise our offer?

gbenson says

I generally try not to be a conspiracy theorist

Why are you still interested?

thomas.wong1986 says

The motto for overpaying back then was .. "it didnt matter because it was free money anyway, and I have more where that came from!"

Right, the money wasn't created out of thin air. That's the thing about asset pricing -- there's actually no such thing as "cash on the sidelines." When one person takes his/her cash from the "sidelines" and buys an asset, the seller then takes that exact same cash and puts it on the "sidelines." No net change.

By the way, someone was telling me about how their parents bought in Los Altos for 1:1 income to house value ratio back in the 70s. I think the raw number was something like $100-120K, which was quite a considerable income back in those days. Still, I don't think it's equivalent to the $1M+ income you'd have to have now:

http://www.julianalee.com/reinfo/sold-LA.htm

this happens a lot with condos. They make money on both sides of the deal, through managing hoa and building them. I'd walk away.

Ah, Portland. The dream of the 90s is alive in Portland, Portland...

gbenson says

Plus now that I am aware of the relationship between the HOA and the owner of the rest of the units, I know whose unit would get the yukky end of the proverbial stick.

Yes, I've heard of this happening in boomtime condo developments -- weird collusion between HOAs and insider owners that screws the minority owners.

gbenson says

didn't want to sound too harsh on our rejection of the sellers 'counter' if the consensus is that I am just over-reacting.

No, nothing over-reacting here. You are exhibiting a natural response. You are probably correct that even $42K in this development would probably be a mistake. It is perfectly rational not to overbid in this scenario. It is only during the boom that people became comfortable with rampant overbidding, and it was a bad thing. You are perfectly correct to worry about whether you are getting the right value here.

corntrollio says

By the way, someone was telling me about how their parents bought in Los Altos for 1:1 income to house value ratio back in the 70s. I think the raw number was something like $100-120K, which was quite a considerable income back in those days.

Even for employer like HP that would be way way high in compensation back in the day. Different mentality back than.

I would look to Route 128 which had more hitech employers/ees and higher incomes.

"In 1955, Business Week ran an article titled "New England Highway Upsets Old Way of Life" and referred to Route 128 as "the Magic Semicircle". By 1958, it needed to be widened from six to eight lanes, and business growth continued. In 1957, there were 99 companies employing 17,000 workers along 128; in 1965, 574; in 1973, 1,212. In the 1980s, the positive effects of this growth on the Massachusetts economy were dubbed the "Massachusetts Miracle".

Major companies located in the broader Route 128 area included Digital Equipment Corporation, Data General, Thermo Electron Corporation, Analog Devices, Computervision, Microsoft, GTE, Polaroid, Sun Microsystems, BEA Systems, EMC Corporation, and Raytheon."

bob2356 says

Do you guys have an actual point? Other than being a PIA.

Mama I'm trying to get them to tow the line but THEY just wont LISTEN!

Troy says

Thing is, I know plenty of people who cashed in 1997-2001 (and 2006-now at Apple & Google) and no longer have to work. There really isn't that much supply in the Valley.

Those are well know names today, but few heard about Ariba, Agile, Commerce One, Matrix One, VerticalNet, I2, Tradex, PurchasePro, and a few others, each valued into the the billions.

Certainly were not worth that much, but had people who retired early.. Many who cashed out left the region, and some stayed.

HOAs - the American Soviet.

If you really feel this is because you started asking questions and the HOA is trying to keep things under covers, why not type up a flyer with this story. Make it clear there is *no* evidence of anything wrong going on, however your just wondering out loud and feel that transparency is a good. Leave the flyer at the condo gate and swimming pool.

gbenson says

Needless to say we don't, but I can't help thinking this is the banks way of getting us to 'go away' so they can take the higher offer.

There are common tactic to get you to pay more. All you do is stick to your guns. Back when i purchased my home, we didnt see this nonsense (overbidding, higher appraisals, etc etc).

Read this...http://www.appraiserspetition.com/

corntrollio says

It is only during the boom that people became comfortable with rampant overbidding, and it was a bad thing.

Right on mark. Its become an institutionalized behavior with buyers. And some still claim today, even as prices have declined, its still common practice. There is something really wrong here.

thomas.wong1986 says

Even for employer like HP that would be way way high in compensation back in the day. Different mentality back than.

Well, note that even though it was the 70s, that was both parents' combined income. That would be more than half a million in annual income for each parent to have a 1:1 ratio today based on median price.

thomas.wong1986 says

There are common tactic to get you to pay more.

Yes, this is quite common, especially on short sale scenarios. I've had a few friends bid on short sales and get told by banks that their bids were too low. Lo and behold, several months later, the property still hasn't sold, and the bank calls them and says, "okay, okay, we'll take $X."

By that point, you'd be a fool to take them up on the offer, because the market price is likely lower and the bank is more desperate. The correct answer is "well, yes, kind bankster sir, I am still interested in buying your property, but not at that high a price."

Corn, Lol! yep that is very true.

corntrollio says

Yes, this is quite common, especially on short sale scenarios. I've had a few friends bid on short sales and get told by banks that their bids were too low. Lo and behold, several months later, the property still hasn't sold, and the bank calls them and says, "okay, okay, we'll take $X."

By that point, you'd be a fool to take them up on the offer, because the market price is likely lower and the bank is more desperate. The correct answer is "well, yes, kind bankster sir, I am still interested in buying your property, but not at that high a price."

I don't follow the logic of the price being acceptable to your friends and then only "several months later" it is clearly too "high." So if the bank had accepted their initial offer, would they be whining about how they overpaid or would they be content that they got it for what they wanted.

Using your strategy, have any of your friends purchased? Or is this a technique that guarantees they may never buy since they always want something just out of their reach?

Most US food is industrial waste, repurposed as food with the addition of heavy doses of corn syrup and chemical flavoring and scents ("Artificial Flavoring"). There was a great article about making food smell and look like the real thing, when it's mostly chemical by-products, all the way down to the "hamburger smell."

However, meat in a McD's burger is a hell of a lot better than what you get at the grocery store. McD's doesn't allow irradiated beef and buys mostly grass-fed free-range cattle from South America.

Ground Beef stateside is from feedlots from around the Country... and also China?! Yep, the meat packers have successfully stopped the government from printing "Origin" labels on ground beef for decades now. But I do know that China is one of the top 10 countries that ship ground beef to the USA.

thunderlips11 says

Most US food is industrial waste, repurposed as food with the addition of heavy doses of corn syrup and chemical flavoring and scents ("Artificial Flavoring"). There was a great article about making food smell and look like the real thing, when it's mostly chemical by-products, all the way down to the "hamburger smell."

10oz, that just shows you how REALLY expensive "REAL" food is in the States.

The real deal costs a fortune. Whole Foods is insane in price.

But I think you are/have been in Peru/Chile. You gotta be able to taste the difference, and notice the prices ain't that crazy.

state says

instead of doing your usual making-stuff-up dance why dont you tell us where you stand on the issue

That's just the point, nobody "creates jobs" that's the Silliest thing the Rest of us has ever heard.
But you can stop doing Shit that is destroying free markets and killing small business. Then those lost Jobs magically reappear.
Funny thing happens when there's more entrepreneurs other than international companies owning and selling everything.
The money gets circulated, competition grows.

All that has to be done, is the Government has to stop giving them money. But that wont happen because this government is Obama Co. the biggest multinational Corporation on this side of the Nile.

I've got to get into Politics, and run for office. The time is ripe for the pickings too.
State, I bet could make you send me all of your money, if I whispered prudy Liberal things in your ear just right.

jeffranes flagged this data by Patrick as incorrect:

As of date = 2011-06-19

Apartment number

1 bedrooms

1 bathrooms

Type is Multi

Monthly home owner association fee (HOA) is $0

Square feet is

Estimated rent is $2053

Asking price is $899000

jeffranes, please say what part of that data is incorrect.

Patrick, please say why you think that the data is correct.

corntrollio says

just_passing_through says

I've been hearing about a lot of businesses leaving CA-specifically and heading to other countries, states etc..

The data doesn't support that -- let's look at businesses in California over the last few years:
2006: 1,265,268
2007: 1,304,291
2008: 1,337,920
2009: 1,347,245

Even in the worst economy since the Great Depression, the number of businesses in California has increased, although growth has certainly slowed because of the economy.

http://www.labormarketinfo.edd.ca.gov/?pageid=138

That's why in another thread I strongly cautioned people about overgeneralizing based on trend articles in mainstream media.

Well, that sounds like good news.. It's the kind of thing I'd want to see if I were to put down roots here and buy a place.

I wonder what types of businesses those are. Maybe lots of start ups from people who were laid off?

This is one of the articles I'd read:

http://www.statesman.com/business/california-lawmakers-say-they-need-to-follow-texas-1404748.html

Here is a snippet:

After two days in Austin looking for advice on how to stop their state's mounting job losses, a group of California lawmakers said the takeaway from their trip turns out to be fairly simple.

They said they've learned that they need to follow Texas' lead in loosening the regulatory reins on businesses — because companies won't stay in California if the state keeps weighing them down with red tape and taxes.

"We got a great message: Regulatory oversight (in California) is too much, the taxes are too high, we need to streamline government and not become a 'nanny' state like we've become," said state Assemblyman Dan Logue, a Republican from the Sacramento area who led the delegation.

"We talked to businesses who tried to make it in California and relocated (to Texas) because it's nearly impossible to do it there. We have to identify the reasons why."

The California delegation included a dozen state officials, most of them Republicans, but also Democratic Lt. Gov. Gavin Newsom.

The members said their visit was spurred by the knowledge that in the past three years, California has lost 1.2 million jobs; Texas has gained 164,000 jobs in the same period.

No I order Burgers by the bag. Then I wash my self with a rag on a stick. And do you know why? Because this America, and it is so damn beautiful the whole world want's to be like us. Well they think they can eat big macs and Kentucky fried Chicken and will end up looking like Brad Pitt, and Jenifer Aniston... But I Digress!

And there's no doubt in My mind, that you have been anywhere in the World past a book in a Liberal Library.

It's OK State the World's pretending with you.

just_passing_through says

This is one of the articles I'd read:

http://www.statesman.com/business/california-lawmakers-say-they-need-to-follow-texas-1404748.html

Let's see concrete data, not random ideologues engaging in confirmation bias. What specific things in Texas worked and why and what data shows that they worked?

California also has a more skilled workforce, a critical mass in technology, a better venture capital environment, etc. Taxes don't tell you everything. It highly depends on the business. If California lost most of its jobs in food service, and Texas gained its jobs in food service, I'm not sure California wants to emulate Texas.

thunderlips11 says

But I think you are/have been in Peru/Chile. You gotta be able to taste the difference, and notice the prices ain't that crazy.

That is what has prompted my rant.

They have a huge national grocer here called Tottus, it's like their Wal Mart. The Groceries there are the same price as back in the states. A Chicken is 16 Sol's that's about 6 or 7 American bucks, my wife said she gets 2 for $8.00 back in the States. But that's on Sale. But it was a bigger chicken and didn't looked all pumped up with Color and Homones. Even though it was a bigger bulkier bird but it had the bone structure to match.

Get this I bought a Phone it's like a Wireless Desk phone MoviStar Telephonica, it has a sim card. The service is 20 sols a month. The phone cost me 79sols first month service included. I need a phone to work and stay in touch back in the states. The phone card for some reason will go much further on this phone considered a home phone, though not tethered to a land line, than on a cell phone which would cost me a $1 a minute, instead of 15 cents.

While I was out getting the phone I stopped and picked up some milk, cereal, bread and toilet paper that cost me as much as than the phone. 79 soles, which is about what I would have paid in the states. Considering they don't sell in large packages.

The Waiter in the restaurant in Mira Florez said he makes 175 US dollars a Month. Which is less than 500 Soles a month.

Most people don't shop there, they can't afford it. Lucky for them the place that are nothing more than a few brick walls with tin roof, markets are still around. The places that has the Chickens still with the head hanging by their feet and rows upon rows of produce grown local by local farmers. It's cheaper there, but for how long.

Corporate Consumerism is here with a vengence, I see a huge difference in Television ads, media and Corporate branding even on the most clandestine rickshaw cart or fruit stand. Then when I was here ten years ago. Their meager markets will be forced out as expansion and development consumes the land that the peasants still farm.

Like I observed in Asia technology is dirt cheap, life is even cheaper. It's the COST of living most can barely afford.

Though on a more positive note, my MIL laws community now has Garbage collection, with a real Sanitation truck and all. They don't just collectively burn the garbage in a nightly ritual like the last time I was here. Also there's a discerning effort to grow grass and terraform this part of the desert. Though the foliage looks like it could use a spritzing, from a tender gardener. Every thing is covered in dust, then it's the winter rainy season. And it wont even give a proper rain just a constant mist mixed with a few droplets that randomly ping the tin roofs.

Greetings from Pachacama.

Just blocks from my MIL's house.

Oh and talk about conservation?
The Taxis here spend about 1200 USD, to convert their '92 Nissan hoopties to Natural Gas. Yup just old USA discarded junk they are taking out the icky parts and putting in the LP gas parts. The taxi driver says he drives all day long on 20 soles. or $6.00 that's about 300 miles of driving. Yep no Eggmobiles no Liberals bitching about foreign Oil they do it, because it makes economic sense and the conversion industry is mom and pops industry, not Big Brother's Company Store Incorporated.

State should really get out and see more he'd be disgusted by his behavior and ideals.

ch_tah says

Using your strategy, have any of your friends purchased? Or is this a technique that guarantees they may never buy since they always want something just out of their reach?

Yes, they have. There are always other houses, and they've never become too in love with the one house. And when I say "several months later," in some cases that was up to 9 months and the market tanked quite a bit in between (think 2008-2009 in the Bay Area where inventory was sky high when nothing was selling). Banks were still quite slow with short sales back then, and their processes have improved since.

I'm not sure why you feel the need to put all the negative connotations on it. The house wasn't "out of reach" because they could have made a full price offer. They just didn't think it was worth it based on the market.

Tenouncetrout says

That is what has prompted my rant.

They even have all the Mickey D's and Kentucky Fried Bastards.
The Animated Television actors hawk the Hamberquesas with such pride. No Gay Clown King making Ambiguously awkward moments, they are proud to consume.

If Mexico is anything like Peru, they don't need to come to America we're already there. They can deliver for the King of the Hamberquesa on their own damn roads. That is if they don't get their damn heads blown off by the Guns Obama's ATF guys are selling on the streets down there.
That's it, Obama is creating job openings in Mexico one stiff at a time.