patrick.net

loveuser: Actually, that's been the typical (and I realize very general) economic pattern for the past few decades. Booming stock market = Stagnant real estate = early and mid 1990s, 1980-87. Stagnant stock market = Booming real estate = most, but particularly the late 1970s, late 1980s, 2000 to ??? People get discouraged in one sector and put all their eggs in the other. Lather. Rinse. Repeat.

Actually a slight correction to my above post. The early 1980s was a time when, quite frankly, both stocks and real estate sucked thanks to high inflation, high interest rates and high unemployment and just an otherwise crappy economy. But things turned around about '84 or so.

Central Cali,
Over 50% of housing in Visalia (where I live) was bought as “investment.” That is not anecdotal, that is a fact.

Carefull where you buy. When things go bad, that investment may become the next slum...

Observer, your observations cannot be more wrong. Which housing bull did we slaughter? We love reasonable housing bulls. We are probably out of topics mostly because our theory is becoming fact and truth will soon speak for itself.

Sacto-
ow that everyone has the in-home ATM they seem to want to look like the beautiful people down south and have all the stuff too. I’m not trying to sound bitter but I left So Cal to get away from that and I’m a bit annoyed that my area is getting infected with the gotta-have germ.

Yeah, reminds me of all the name-dropping/"net worth" swagger during the dot-bomb.
Back then, my crass-o-meter went into the red zone, and it's tipping that way again during this RE gloat-fest. Nothing changes, I suppose. As an escape, we've recently started reading one of those "simplicity" books (suppose it's popular now) to get a sounder perspective on life and possesions.

I used to feel pressured around housing speculator friends. In the past few weeks or so, all such stress was suddenly gone. It appears as if I can sense the end drawing near. Time is up. Game is over.

My new stress is how not to miss out on the bust. Positioning for this crash has been quite difficult.

After reading some recent postings, this blog feels much like a support group for housing bears dying to own a house at a reasonable price, who are feeling down and depressed because the market is going crazy.

I feel sorry for the crazy people. Or maybe I'm crazy ;)

To Observer:

Oh, those poor housing bulls! Let's all feel so sorry for them. There are plenty of places on the Net where housing bulls get together, pat each other's backs and congratulate each other on their brilliant investment. (I.e., Craiglsist housing forum to name but one) The housing bull market has gone on for so long that people are just so sick and tired of hearing about it ad nauseum not just from bulls that post here, but the media. Even yesterday's Bay Area DataQuick report covered by the Chronicle, despite the ever so slight dip, still dripped of unrelenting optimism.

The premise of this site is for the housing bear audience. Why do we have to believe what the bulls do? Why aren't we allowed to post holes into the argument of the occasional bull that comes here? And why do you CARE?

I just checked, and I have no evidence of carnage or slaughter upon my body.

Jack, have you checked whether you still have your liver?

Novel concept:-
Buy a house now, to be paid for with shorts on TOLL +FNM.

Oops,
Above post was not investment advice.

Thinking about that one.
Maybe you could consider this a straddle.

Maybe you could consider this a straddle.

What "straddle" are you talking about? The option strategy? Should we use a "synthetic straddle" on TOL and FNM (aka put ratio backspread) since we are betting mostly the downside?

Buying property, and shorts would be contrary bets.
Actually, probably better described as hedge.

According to my observations, Jack is not a housing bull. He appears to quite pessimistic about the future of the housing market.

Who is the housing bull you are talking about?

Observer,

According to my observations, Jack is not a housing bull. He appears to quite pessimistic about the future of the housing market.

Actually I think most RE bears would be bulls if pricing was more realistic.
Being a bull or bear, doesn't make you right or wrong as it just reflects the value you perceive. Prudent investors would try to buy below value, and ideally sell at a price higher than value.

"Actually I think most RE bears would be bulls if pricing was more realistic."

Exactly! This has been more than simply a bull market. 20% growth year after year is a bull market on sterrhoids.

According to my observations, Jack is not a housing bull. He appears to quite pessimistic about the future of the housing market.

Welcome back, Fake P!

I wonder why Fake P has remained an observer for so long. We need you!

Do you really know that this is Fake P?

Unless someone took over his computer. :)

Mr. Right

Where do you stand on the market? Sometimes you seem bullish and then others you seem to take a bearish view. Is your view primarily dependant on the location? Just curious.

Mr Right,
This is the only factor of todays housing market that concerns me.

All I can say is "Like lambs to the slaughter".

I wonder if Fake P stayed away because he felt we were pummeling him (or attempting to) too much.

Dream House

Location, overlooking the beach, near to cafes and surrounded by trees but still close to the city. Good schools, nice community and nice weather. Mild in winter and warm in summer. This sound suspiciously like Bronte Beach in Sydney, Aus:)

House style, open living room that is spacious (not into multiple living areas, I'd prefer one large loft type space) with an open kitchen - modern, large and with all the mod cons. 4 bedrooms and a separate inlaw room for relatives. A flat backyard that you can see from the living room. Around 3000 sq feet. Asian fusion styling - clean, fairly minimal but comfortable with personality, fairly modern with lots of nice light.

Cost: $800,000 seems about fair.

I wonder if Fake P stayed away because he felt we were pummeling him (or attempting to) too much.

I like Fake P, even though he does not like me. I am being sincere. Of course, I like everyone here.

Peter P

Sometimes I wonder if you're too nice for your own good. ;)

On Kentucky; a friend decided to pack it in from the BA and move to Kentucky around 1-2 years ago. He bought a huge lovely old homestead for his family for a great price and made the big move. Unfortunately the work was boring (he is very smart and works in IT), the people not as stimulating (and he grew up around here so knew what to expect), the religious fanatics a little hard to take and the racoons impossible to evict once they took up residency. They came back after losing a lot of their savings.

Not all beer and skittles.

Fake P,
Careful, when people are nice to you they generally want something. ;)

Careful, when people are nice to you they generally want something.

Exactly, I want him to be nice and to make comments. ;)

Jack

I've always thought your predictions were reasonable. I'm not sure how well more desireable areas would withstand a massive crash (which I sincerely home doesn't occur) but I do think your intangible argument has merit. Some areas are just going to do better because they are better.

I hope doesn't occur.... geez.

That last typo could be called a Freudian slip couldn't it? ;)

I’m not sure how well more desireable areas would withstand a massive crash (which I sincerely home doesn’t occur) but I do think your intangible argument has merit.

Prime locations are usually the last to fall and the first to go up. However, they can still be volatile at times. They are part housing, part asset, and part collectible.

Exactly, I want him to be nice and to make comments.

But he should already know that he is among friends here.

That one was better than when I was commenting about Peter P’s “vertical neighbors” post, and I said “What other kink are there?” (I meant to type “kind”)

I remember reading that post and thinking "what does that mean?" I think I'm glad to know it was a typo. :)

Interesting point. If the “bubble” has started bursting won’t we see folks jumping in and buying these reduce price houses first? Thus artificially inflating the median house price, and giving ammo for the bulls to show prices just keep on going up

I'm not sure, the speculators seem to buy en masse and then sell en masse. I don't know if enough buyers will jump in if the market seems too shaky.

Jack, I thought you imply that not having vertical neighbors is a "kinky" idea.

This is where Peter P usually says “but once the psychology changes, people will wait for the price to come down even further” …

That's actually what I think is going to happen. And if the stock market happens to rally at the same time, you'll start hearing people say "I wouldn't put my money in RE, stocks are a way better investment." Just as the reverse is true now.

Mr. Right

Many 'bears' on this site have said if you plan to stay and can afford the home, then by all means buy. But most of us think that if you have to take out a NAAVLP to stretch your way into a home, then it's not a good bet. We're often accused of being doom and gloom around here, but I think most of us are pretty reasonable. A lot of us just think the market's totally nuts right now.

In the US, financing 80% of the median priced house takes up only 15% of the median household income, up modestly from a year ago but lower than at any time in the previous two decades.

Mr.Right, it is comforting to know that most people will be unharmed by the real estate downturn. However, the "percentages" themselves are insufficient to show the health of the real estate market.

Price discovery always takes place at the margins.

It takes a few over-extended people to bring down the market on low volume.