patrick.net

wthrfrk80 says

an attitude of genuine love

I would argue women are not genuinely loved by men until they are paid the same for the same job" etc, etc, in the midst of life we are in debt etc."

[...]

Fwiw, the chart that leads up this thread is misleading and inaccurately titled. It is simply bogus to conclude that it represents what actually happened to overall prices in any area during the periods represented.

Why? Because the data represented from the FHA only includes conforming loans. So, in any year that the conforming loan limit went up faster than actual home prices, the graph will simply catch the new larger number of properties that would have previously been financed as a non-conforming loan.

A Sunnyvale house that in 2000 sold for $500K would probably not have been included in the data owing to an underlying conforming loan limit of $379,050. But that same house being resold for $500,200 in 2003 would have been financed with a conforming loan which would now be recorded as included in the data. Viola, highly skewed data!

So the chart is going to loosely track whatever happens to the conforming limit and really only represents what is happening in a given area where only a small minority of the home prices exceed limits that would price them into conforming loans.

Hmmm, I've tried to upload a chart that shows the conforming limits over the same period and I never seem to get anything after clicking Upload Image. Well, I tried....

delete this account says

Fwiw, the chart that leads up this thread is misleading and inaccurately titled. It is simply bogus to conclude that it represents what actually happened to overall prices in any area during the periods represented.

No, not bogus at all. Prices have spiked from just 1997 to 2000, even though LT fundementals didnt support that.. JOBS.

After 2000 ? totally irrational!

Born, and raised in Sunnyvale, so dont make SU sound like its Bel Aire or something.. its not! Take a step back and look what prices were for decades...

Yes! it a fucking bubble all right!

Fed will keep rates low for a vey long time as they realize increasing rates will have a negative impact on housing. They will continue trying to re-inflate the housing market over the next decade. Unfortunately, I need a house, have a baby on the way, and have to face the fact that my wife wants a house.

I would rather rent, but renting a 4 bedroom house in nice area in the Bay, probably runs 4-5K per month. A 700K+ loan interest only 3% interest loan + taxes - minus the tax break make the decision to buy a relatively easy one.

I agree with many of your comments - job market sucks and the recovery is a myth. Every US President, whether Obama or Romney wants to govern in an interest low environment.

Helloeeze says

If houses decline to the level of inflation, my home in San Jose will be worth 50,000 more than I bought it for in 1989. Seriously.

And yet that is how it works..even go back to the 89 peak and correction.

By the time this thing is over all our minds are going to blown how low prices are at the bottom.

Dumbest time in the history of the world to go into debt for decades so you can think you "own" a house.

pazuzu says

By the time this thing is over all our minds are going to blown how low prices are at the bottom.

Dumbest time in the history of the world to go into debt for decades so you can think you "own" a house.

But, if your mortgage is the same as rent and you're getting the tax incentives you weren't getting before (important when your household gross is close to $300K) and your utility bills are half of what they were in the rental...

...it makes sense.

And, it was a fixer priced ~$100K less than everything else around it. That's why we're already being approached to refi at no cost, only having lived here a few months.

That's the only scenario in which it would make sense and that's why we bought. Otherwise, I would have stayed with the rental.

“and your utility bills are half of what they were in the rental...”

That’s an extremely rare circumstance, in fact it sounds like bullshit unless the place you were renting was much larger than what you bought, or something was wrong with it, in which case your rent vs. own comparison is also bullshit.

Either way having to factor in the gross overpayment of utilities in a rental shows just how far one has to reach to make the case for buying.

duckhead says

“and your utility bills are half of what they were in the rental...”

That’s an extremely rare circumstance, in fact it sounds like bullshit unless the place you were renting was much larger than what you bought, or something was wrong with it, in which case your rent vs. own comparison is also bullshit.

Either way having to factor in the gross overpayment of utilities in a rental shows just how far one has to reach to make the case for buying.

It's rare but it's real. I just got last month's bills. I'm looking at them.

We made out like bandits, mostly because of the location and the tax advantages. Whether or not you think that's fair is up to you but the numbers are what they are.

wthrfrk80 says

FunTime says

Or a woman. Or from Japan or Germany.

My whole family is of German ancestry. We had no problems. Even my Grandpa who came here in the 50's with a thick accent had no problems. Even though he fought for the Germans in WWII. He was the one who taught me how to properly fold and respect the American flag, by the way. Pretty amazing when I think of it, considering that same flag was on the planes bombing the shit out of his homeland.

Women were treated better then since they were seen as future wives and mothers; not just sex objects. The whole "sex is just recreation" concept had not yet gone mainstream. Cooking, cleaning, and taking care of a family at home had not yet been scorned by an angry bitter minority. As if sitting for 40+ hours a week in a cube farm is somehow more glamorous and fulfilling.

I have a friend in Ohio who was raised old school Italian and he still looks at women as future wives and mothers. He evaluates potential girlfriends with that same set of criteria.

wthrfrk80 says

rootvg says

Peter Schiff said the Chinese would flood in here to invest all those Dollars we've given them over the past twenty years. He was right.

They said the same thing about the Japs in 1989. Remember the final episode of "Newhart" where the whole town sells out to a Japanese RE tycoon and Joanna is wearing a kimono?

China in 2012 = Japan in 1989. Same kind of asset-bubble driven economy. China will have a "lost decade" just like Japan...except with potential civil unrest and violence.

I loved that episode, especially where Suzanne Pleshette shows up in the final scene.

FunTime says

My wife has made the same or more money than me for years. The only time I heard about it was during flight training. You burn some bucks doing that.

Call it Crazy says

rootvg says

I have a friend in Ohio who was raised old school Italian and he still looks at women as future wives and mothers. He evaluates potential girlfriends with that same set of criteria.

I thought the criteria was when you get a new girlfriend, you look at her mother, and expect your girlfriend will look like her mother in 30 years....

That's what my father told me. My mother-in-law smoked and took a lot of prescription drugs, none of which my wife does so would one think she'll fare much better. My mother-in-law is also in a nursing home in her seventies and I've had flight instructors who were almost that old.

The chart only goes to Q1 of 2011 - is there an updated version available?

BayArea007 says

Fed will keep rates low for a vey long time as they realize increasing rates will have a negative impact on housing. They will continue trying to re-inflate the housing market over the next decade. Unfortunately, I need a house, have a baby on the way, and have to face the fact that my wife wants a house.

I would rather rent, but renting a 4 bedroom house in nice area in the Bay, probably runs 4-5K per month. A 700K+ loan interest only 3% interest loan + taxes - minus the tax break make the decision to buy a relatively easy one.

I agree with many of your comments - job market sucks and the recovery is a myth. Every US President, whether Obama or Romney wants to govern in an interest low environment.

Why do you need/want 4 bedrooms - 2 1/2 or 3 should be plenty, no? You can get that for $2500 or less in decent SF residential neighborhoods.

Patrick,

Based on the graph you provided, do you seriously believe that home prices in SF & SJ will come down to the mid $300k in the future?

Prices will not come down to the mid $300Ks. In many areas that was the previous low following the Loma Prieta slump which didn't really start rebounding until 95-96.

Logarithms are your friend.

Randy H says

Prices will not come down to the mid $300Ks. In many areas that was the previous low following the Loma Prieta slump which didn't really start rebounding until 95-96.

The declines in the Bay Area had very little to do from Loma Prieta.. we had an earthquake.. not much of a big thing for many... Now talk about what happened to the tech industry during the same period ?

$300K.. in CA it sure can happen! and plenty of sunshine without the high markup!

Southland Home Sales Up From Year Ago; Median Price Climbs to $300K(DQNEWS)

http://www.dqnews.com/Articles/2012/News/California/Southern-CA/RRSCA120717.aspx

E-man says

Based on the graph you provided, do you seriously believe that home prices in SF & SJ will come down to the mid $300k in the future?

Why would it not ? All the reasons people cite for high Bay Area prices during the bubble were also true in expanding economy of 70s and 80s and yet it fell back to long term trends. Since 2000 our economy has contracted and the same time we saw prices skyrocketed for all the wrong reason.

Yes, eventual prices fall back !

thomaswong.1986 says

eventual prices fall back !

The key question is, how long would we have to wait? are we still alive by then to see those prices?

E-man says

The key question is, how long would we have to wait? are we still alive by then to see those prices?

the more govt intervention, the further out the correction.

thomaswong.1986 says

$300K.. in CA it sure can happen! and plenty of sunshine without the high markup!

Also, keep in mind that a $300K median house in the Bay Area/LA is equivalent to a $100K house, everywhere else, in terms of house quality and land sq footage. So, even at $300K, you are still overpaying for what you actually get.

dunnross says

Also, keep in mind that a $300K median house in the Bay Area/LA is equivalent to a $100K house, everywhere else, in terms of house quality and land sq footage. So, even at $300K, you are still overpaying for what you actually get.

That statement makes no sense. It strikes me that you're discounting the first three most relevant variables driving the market price for real estate.

And it doesn't matter what you think. Market prices depend upon what everyone else thinks. Seems a lot of people have problem with that very basic concept.

Randy H says

It strikes me that you're discounting the first three most relevant variables driving the market price for real estate.

Yes, I am discounting the 3 most relevant variables - "location, location, location", because these variables determining value today, will no longer be there tomorrow. Detroit was a desirable location 40 years ago, but look at it, now.

dunnross says

Detroit was a desirable location 40 years ago, but look at it, now.

But,but that can never happen to SF,correct?

300k+ for most of the bay area is just right for this economy. Interest rates may be low, but when you buy a home for 700-900k or even higher, you are stuck with high property taxes too. For this job market, mid 300s is right for most areas. Now if there is a new dotcom that cannot be offshored and done anywhere else, then fine-but not for this economy.

Call it Crazy says

rootvg says

I have a friend in Ohio who was raised old school Italian and he still looks at women as future wives and mothers. He evaluates potential girlfriends with that same set of criteria.

I thought the criteria was when you get a new girlfriend, you look at her mother, and expect your girlfriend will look like her mother in 30 years....

That's such bull. I look like my dad who looks like his mother, so I'm going to look like my grandmother--already saving for the plastic surgery she got when she was 70 :)

rufita11 says

Call it Crazy says

rootvg says

I have a friend in Ohio who was raised old school Italian and he still looks at women as future wives and mothers. He evaluates potential girlfriends with that same set of criteria.

I thought the criteria was when you get a new girlfriend, you look at her mother, and expect your girlfriend will look like her mother in 30 years....

That's such bull. I look like my dad who looks like his mother, so I'm going to look like my grandmother--already saving for the plastic surgery she got when she was 70 :)

There's an acquaintance of ours who looks very much like we think an old flame of mine will look when she turns sixty, the bags under the eyes and spreading out in the back, etc. Whenever we see her I look at my wife and say, hey...I wonder if is here...

VERY funny stuff, but I guess you have to be there.

Everybody that I know that knows the SF Bay area say housing will never correct like it has done for the Washington DC area, Florida, Nevada, Arizona, etc. because everybody wants to move to San Francisco. So they consider San Francisco the exception because of several factors such as being gay-friendly, having a great climate, and being a job engine for technology companies.

lostand confused says

but when you buy a home for 700-900k or even higher, you are stuck with high property taxes too. For this job market, mid 300s is right for most areas

Yep. In the tech department that I work in, most of those coworker engineers' property tax bills are higher than my family's entire housing cost.

E-man says

thomaswong.1986 says

eventual prices fall back !

The key question is, how long would we have to wait? are we still alive by then to see those prices?

Even worse, how much higher will the trendline be when they finally "revert to the mean"?

Imagine the 1994 buyer in San Jose who stumbled across that chart. He would see the trendline then at 200K, yet San Jose still at 250K and conclude "San Jose is gonna crash, I will wait it out".

Imagine too he stubbornly clung to his prediction that SJ would "revert to the mean" and refused to buy in 1995, 96, 97, followed by his horror as prices exploded upward 1998 and beyond, causing him to wait even further.

Finally, even if they did magically "revert to the mean" today, SJ would fall to 300K. Meaning at the end of the day, our poor guy would refuse to buy at 250K, rent for 18 years waiting for prices to fall, and then buy at 300K.

B.A.C.A.H. says

Yep. In the tech department that I work in, most of those coworker engineers' property tax bills are higher than my family's entire housing cost.

Which is f***ing crazy. How can those tech companies afford to do business in those areas? At what point does "nice weather" become "not worth it."?

Hawaii has nice weather.

CDon says

Finally, even if they did magically "revert to the mean" today, SJ would fall to 300K. Meaning at the end of the day, our poor guy would refuse to buy at 250K, rent for 18 years waiting for prices to fall, and then buy at 300K.

Yes, except the recession in the 90's was nothing at all, like what we are experiencing now. That was just a small bump in the Roaring Boom of the post WWW-II era. What we have now is a multi-generational depression, a complete paradigm shift.

adarmiento says

So they consider San Francisco the exception because of several factors such as being gay-friendly, having a great climate, and being a job engine for technology companies.

1. San Francisco is gay-friendly, but people-unfriendly.
2. City climate sucks. There is no summer in San Francisco. If you move away from the city, then it becomes not only people-unfriendly, but gay-unfriendly, as well.
3. Jobs here are too much skewed towards the high-tech, ie. non-diversified like the other places.
4. Most of the people I spoke to in cities like Chicago, think San Francisco is one of the worst cities for life, and have no intentions of moving here. Only people who live in San Francisco think it's something special.

freak,

I don't think its about the weather.

Lotsa people come here from all over the USA and all over the world. Some of them like rootvg, dunross, patrick, Randy H post here. They are all making some kind of trade off or sacrifice to pay for the expensive housing here.

Maybe we can read some remarks from them about why "The Bay Area Is So Special", since they are the ones who've voted with their feet.

What is the medium income in Bay Area? What can people afford at about 80K a year fixed rate? There are microclimates in the Bay Area. San Fran, Berkeley, and Palo Alto, for instance, are areas of wealth concentration. Plus there is very little home development. On the other hand, there area areas, like Richmond or Vallejo, that have very low prices but are not so desirable. I suspect that many people do not want to move to the far out areas because of commute time. One last note: I've seen whole empty neighborhoods with no "for sale" signs. It appears many homes are not being placed onto the market. At the end of day, what can people afford?

"1996..." Not a bad time to buy.

2012: Extremely poor time to buy in most bay area locations.

dunnross says

San Francisco is gay-friendly, but people-unfriendly.
2. City climate sucks. There is no summer in San Francisco. If you move away from the city, then it becomes not only people-unfriendly, but gay-unfriendly, as well.
3. Jobs here are too much skewed towards the high-tech, ie. non-diversified like the other places.
4. Most of the people I spoke to in cities like Chicago, think San Francisco is one of the worst cities for life, and have no intentions of moving here. Only people who live in San Francisco think it's something special.

After almost thirteen years of living in San Francisco, I disagree with three of your four points.

1. The friendliest people I've ever met, I've met in San Francisco.
2. If you love temperatures during June to August that require air conditioning, you will not love San Francisco temperatures during those months. If you love wearing jeans and a tshirt during the day and throwing on jacket in the later evening, you will love San Francisco weather during those months.
3. No data on which to base an opinion. I'd be interested to know what data resulted in your suggestion. I'm thinking surely you don't form opinions based purely on interviewing friends.
4. Since you provided no survey results and I'm thinking your point is based on acecdotes, I'll match every one of your anecdotes with stories of the envy expressed by people telling me San Francisco is their favorite city of all the cities they've visited on Earth.

I don't know what compels me to respond to posts like yours, but I just find San Francisco to be freaking amazing and different in most of the ways I'd want a city to be different.