patrick.net

RentingForHalfTheCost says

Okay, I'll give you that. There are 22 buyers then. Still the same problem. The problem is not low inventory because of lack of sellers. It is low inventory because of lack of buyers willing to pay what would bring more sellers to the game. Remember, you are viewing the number of sellers as to how many people put their how up for sale. In the supply-demand economics everyone is a seller. Everyone is a buyers. Low sales means not enough buyers and sellers are meeting. Why? Because sellers think the prices are too low, and buyers think it is too high. I think Roberto already referenced the chapter in the economics 101 that you need to read.

There are plenty of reasons why inventory is low, not least that those underwater are sitting tight, but what exactly has that got to do with your argument that there are no buyers out there and those that are there aren't bidding? Presumably that's why Robert is saying there are multiple bids where he's from, and why others are reporting a similar situation in parts of the BA.
I have no problem if you argue that parts of the BA are overpriced because they look like they are, but you are arguing the toss with someone who is buying in Phoenix and who is telling you that there are buyers and that prices have risen quite a lot in his area in the last year. You generalize too much and you compound the issue by spouting crap about economics 101.

RentingForHalfTheCost says

robertoaribas says

In fact, I bid on one today, and it got 20 offers in 48 offers, my full price cash offer rejected...

I bid on it also. My 3.5% cash offer was accepted! In the contract I also got the seller to sign up for be my man servant for the next 20 years. I don't understand why your all cash offer never made it. Maybe a personality issue.

Really, what is your problem? You're bearish on housing, he's more bullish. Does that really require you to get your knickers in such a twist?

RentingForHalfTheCost says

It is low inventory because of lack of buyers willing to pay what would bring more sellers to the game.

What an eye opener. You caused me to have a revelation! Thank you.

"Was there ever a people whose leaders were as truly their enemies as this one?"

-Ernest Hemingway, For Whom the Bell Tolls

"Somehow it seemed as though the farm had grown richer without making the animals themselves any richer- except, of course, for the pigs and the dogs."

-George Orwell, The Animal Farm

RentingForHalfTheCost says

Lets see. Live like your house is an ATM machine for 2 decades and then wipe it all away in 1 year of doing absolutely nothing but printing money and waiting.

I don't know about Roberto, but some Realtors I know, and I know MANY, live in a world of NAR's making. They believe the hype and believe it serves them as well as their clients. They will even back up their beliefs with their own money. The one's that do eventually wind up falling off the same cliff their clients do. Unfortunately these are the honest ones. Not honest in terms of perceiving reality, but honest in that they truly believe what they're preeching. It's the minority of Realtors who know it's all just a sales pitch. In most sales businesses you're given a sales manual, you know it's a sales pitch for better or worse. In real estate it becomes a way of life. A self identity. You forget or never realize you're a salesperson delivering a sales pitch.

It's similar to the medical profession. Doctors don't realize they are delivering a sales pitch for the drug companies to their patients because it's in their best interest to push drugs and the drug companes are very savvy in their approach to doctors offering the best statistics and "scientific proof" money can buy.

Your beliefs are based on common sense. Roberto's are based on the numbers he's looking at. The problem with numbers is we tend to only look at the numbers that agree with our paradigm.

I think if deep down Roberto felt he could liquidate with a million dollars profit he would. He's stuck on a slow moving roller coaster that going a little too fast to jump off, yet slow enough not to frighten him.

Let's put it this way Roberto, if it were a stock and you could sell with a million dollars profit at the click of the mouse, knowing the jobs statistics and the artificially propped up nature of the RE market, you wouldn't grab that million bucks today?

ELC says

RentingForHalfTheCost says

It is low inventory because of lack of buyers willing to pay what would bring more sellers to the game.

What an eye opener. You caused me to have a revelation! Thank you.

Oh, my, so you actually weren't being sarcastic.

ELC says

I think if deep down Roberto felt he could liquidate with a million dollars profit he would. He's stuck on a slow moving roller coaster that going a little too fast to jump off, yet slow enough not to frighten him.

Let's put it this way Roberto, if it were a stock and you could sell with a million dollars profit at the click of the mouse, knowing the jobs statistics and the artificially propped up nature of the RE market, you wouldn't grab that million bucks today?

Are you being serious or is this a spoof? 'Deep in your heart you know you'd cash in if you could make a million dollar profit.' WTF.

robertoaribas says

So supply will stay low until prices rise more,

Or (cause there is always an 'or'), prices will fall and inventory will stay low or even decline. If buyers go the way of the dinosaur (which is happening before our eyes), then no one can or will want to sell.

Works both ways. In order for true (not this small bump) prices to rise, we need wages to rise. Don't see it, quite the opposite.

Aren't pay rises tracking above inflation?

robertoaribas says

I bought for (including rehab) 61K, 75K, and 85K. today, those 3 homes would go for 120K, 130K, 140k. However, why sell at those prices, when the rent alone on these three is giving me an over 8% return on the entire asset price, even with maintenance and vacancy estimated? where else will I get 8% on my money?

If I calculate my return on my PG stock from the original cost to me, then I am making over 140% return just in the dividend. However, I wouldn't do that type of calculation to justify not selling. I would use the value I get today in selling. That would only show me a 3.3% return.

As, to where you can get your 3-4% return today. There are a few hundred dividend public traded companies that fit the bill. Housing is not the only horse in the stable.

Bigsby says

Aren't pay rises tracking above inflation?

Unfortunately not.

http://money.cnn.com/2012/09/11/news/economy/wages-jobs/index.html?iid=HP_LN

I should add, that they are tracking close if you believe that real inflation is only 1-2%. I don't. The number is much higher.

http://www.wnd.com/2012/03/you-wont-believe-the-real-inflation-rate/

http://www.cnbc.com/id/42551209/Inflation_Actually_Near_10_Using_Older_Measure

All real estate markets are local. Roberto's experience might not match up to yours. Sounds like a lot of investor interest in Phoenix right now.
In my area supply of houses is extremely low. Nice stuff under 500k is gone in a couple days. Undesirable stuff sits until it reaches a low enough price. High end stuff is a tough sell right now and is actually bargain priced. Overpriced homes, even nice ones, sit until price drops. The buyers that remain are picky and price conscious, but they are willing to move extremely fast.

Quigley says

All real estate markets are local.

I can't believe that there are still people who believe in this rubbish. This is exactly, why we are a long, long way from a true bottom in all the markets across the board. For the umpteenth time, markets are local, but lending is global. Global lending (ie. debt deleveraging) has a 100x larger affect than the variations you will see on the local level.

So please someone tell me why are home prices still sky high in the bay area?

robertoaribas says

when the rent alone on these three is giving me an over 8% return on the entire asset price, even with maintenance and vacancy estimated? where else will I get 8% on my money? AND, with such low supply to demand, prices will continue to rise.

Prices would continue to rise in a free market. This is anything but. And sure you'll get a decent return on rent if you can keep them rented, but I would worry about the value of the houses. Not to mention you didn't buy with cash. There's leverage involved here. I hope your sake you're right, for the country's sake I hope you're wrong. I'm still too uncomfortable to buy because I want to make my money in appreciation if all else fails. If I can't, I want no part of a wrotting house and just over broke renters to keep my head above water. That's no way to live.

My best friend's doing here in Fort Lauderdale similat to what you're doing. He's buying dumps at tax deed sales. Working his butt off cleaning up these places. But he's buying with cash. It's driving him nuts that he's not making money on his money for the first time in his life. He seems happy and a little in denial. From what I see after expenses he's barely making a profit. His only chance will be if these properties appreciate some day.

I don't think mathematics these days will help you as much as understanding market psychology. Granted, the only way the banks can save themselves is by another bubble but I don't think they nor the Government has the juice to pull it off. Just hearing things like Warren Buffet telling people it's a great investment gives me the major creeps.

SJ says

So please someone tell me why are home prices still sky high in the bay area?

A huge inflow of rich male real estate investors from Phoenix. Did you now the house price have nearly doubled over there in the last 2 years. 100% return on leveraged debt. Now that is the American dream.

I have it under good authority that these real estate investors have bought up enough rentals for yard sale prices that they are pulling in 7 figure monthly incomes. Each month they can afford a new BA house. Don't believe me, go check out some open houses and watch for the Arizona license plates. The minute you see one, don't even bother to bid. These guys have a trunk load of cash and will make you feel inferior. Probably best to move to Phoenix and just rent one of their units. It'll cost you twice as much as buying, but at least you'll be warm in the summer.

robertoaribas says

Haha, but not going to happen! I'm taking my riches to the beaches of Thailand, or Ecuador... Not overpriced bay area with cold dirty water, crowded freeways, and bankrupted government!

What happens when the military lead government takes your possessions, and threatens to shoot you in the streets if you complain?

robertoaribas says

Oh, so you mean if prices went up 50% or so, there would be more sellers? even you halfabrain should realize that is called obvious

Of course there would be more sellers. Everyone who was underwater and totally sick of where they feel they've been forced to live all these years will become sellers. I have several friends that would love to get out from under their homes. This market has caused their neighborhoods to decline. And when I asked them what they plan to do if they sell, they all said they would, "rent for a while."

When I sold my condo I wanted to get away from the East Coast and move to San Diego or San Francisco and possibly buy. I see from reading this blog that would be financially insane. What's Oregon prices doing? That would be my next pick.

Housing in many areas of the US was in a massive bubble from 1997 to 2007. Just look at the average income increase over that time frame and the average home price increase. We are treading water right now before another 30% drop in housing by 2015. Unless you can buy good stock at $50 a s.f., I would stay away.

I am with Roberto- rather buy beach front property in Caribbean, Thailand or South America and retire wealthy and happy as the USA becomes a police state.

robertoaribas says

Goran_K says

robertoaribas says

Haha, but not going to happen! I'm taking my riches to the beaches of Thailand, or Ecuador... Not overpriced bay area with cold dirty water, crowded freeways, and bankrupted government!

What happens when the military lead government takes your possessions, and threatens to shoot you in the streets if you complain?

what happens when you die of crotch fleas?

I guess we'll both be dead!

Roberto can be pretty funny at time. Nice! I wonder if there is a real estate bubble in the afterlife because of the baby boomer demographics. If you owned on earth they you become a rentor, if you rent then you become the landlord. Oh, the justice of it all. ;) If you were a man, then a women. Poor then rich. Ugly then handsome, etc. etc. Kinda sucks for the middle of the road people, they won't really change much.

Bigsby says

RentingForHalfTheCost says

Sales are still at record low levels. A bump from the bottom is still a long way from normal.

And a long way from 1975...

Not in inflation adjusted terms. Not at all. Wait for it...

SJ says

as the USA becomes a police state.

"Becomes" a police state? IS a police state... http://discoverpolicing.org/whats_like/?fa=types_jobs

RentingForHalfTheCost says

If you were a man, then a women. Poor then rich. Ugly then handsome, etc. etc. Kinda sucks for the middle of the road people, they won't really change much.

Rebirth is like a pendulum. The middle of the road people been there done that. We just can't remember. Unless...

APOCALYPSEFUCK is Shostakovich says

Everyone who is thinking about buying a home should watch The Road 16-20 times while high on meth and then ask themselves, what will a home be worth after shit 100x as bad as that going down?

Loved that movie (except one scene sort of freaked me out).