patrick.net

Your trend line is showing that prices in 2000 were fairly priced. I worked as an experienced programmer in the Silicon Valley back in 2000, and it would have taken me 30 years and 1/2 of may take home pay to pay off a house which some illegal alien construction worker built in 3 months. And your trend line is showing that as "Fairly Priced"? Give me a f*n break!

"Your trend line is showing that prices in 2000 were fairly priced. I worked as an experienced programmer in the Silicon Valley back in 2000"

I was newly-arrived in the south bay in 2000 and prices were not that out of line, really.

Lending was starting to get weird but 80/20 lending was still a few years away, along with negative-am, stated-income, and other actual suicide lending.

The south bay has been flooded with millionaires these past 12 years. I don't know what the non-fortress is going to do, but don't expect prices in the good parts to come down much.

http://www.redfin.com/CA/CAMPBELL/1776-LEIGH-AVE-95008/home/731653

$800k is overpriced?

google mortgage is gone now

http://reversemortgagedaily.com/2012/02/05/google-shuts-down-mortgage-rate-comparison-tool/

but going with 10% down & 3.75% gives me a $2100/mo average cost-of-ownership over the 30 years of the loan.

Beats renting, maybe.

if it were as easy as drawing a curved line through some points to make a prediction we'd all be billionaires.

Bellingham Bill says

I was newly-arrived in the south bay in 2000 and prices were not that out of line, really.

Some areas jumped 30-50% between 97 and 00. Shit I told my mom (I was young then) that this is a bubble, I'll wait a few years. Looking back I should have just bought obviously.

CrazyMan says

Some areas jumped 30-50% between 97 and 00

That's not a reasonable appreciation in just 3 years. Historically, house prices only go up 2-3% per year, and this is in a good year.

Leslie Appleton-Young says

That is assuming you spend 2%/year in maintenance costs to offset depreciation. In other words, houses don't "appreciate".

Exactly, because house is not an investment. It's just a roof over your head.

Sure when I was arrived in mid-2000 I thought it was a bubble too.

One of my friends bought in the Sunset then for $450k. I thought they were taking a chance but Greenspan had their back 2002-2004.

If interest rates were 8% again, then, yeah, 2000 was overpriced.

The people running the economy know what they're doing, LOL

The problem is this nonsense shows something "extrapolated" that is in fact falling.
Show WAGES on the same chart and show us where WAGES are extrapolating upward while unemployment is 15%.
I had to explain to one of my nitwit friends here how people pay their mortgages: income.
I also had to explain to him how people buy houses: savings from income.

Who bends up this supposed to be straight line? Another economist looks for a Noble price?

REpro says

Who bends up this supposed to be straight line? Another economist looks for a Noble price?

Actually, an inflation should not be a straight line, because it's a fixed percent appreciation. A fixed percent appreciation is exponential, which means that it would only look like a straight line on a logarithmic graph.

dunnross says

A fixed percent appreciation is exponential, which means that it would only look like a straight line on a logarithmic graph.

The difference between an engineer and a (Amex Black) Quant.

It may be true for some parts of the US. But SF which started earlier will take some time. Reminds me similar with the recession of early 90s, which CA was stop falling. But that was a pimple compared to this one. We will see.

dunnross says

CrazyMan says
Some areas jumped 30-50% between 97 and 00

That's not a reasonable appreciation in just 3 years. Historically, house prices only go up 2-3% per year, and this is in a good year.

and some up 100%.

Bellingham Bill says

The south bay has been flooded with millionaires these past 12 years.

Back in 2000 the one's who bought Ariba, Yahoo, and several others for several hundred dollar per share were not the millonaires we celebrate so much. They didnt pop the bubbly so much... Even if you bought Cisco, Intel, Microsoft, SunMicro, or Oracle.. didnt do well either. That was all on the other side of the trade.

dunnross says

Actually, an inflation should not be a straight line, because it's a fixed percent appreciation. A fixed percent appreciation is exponential, which means that it would only look like a straight line on a logarithmic graph.

This graph it’s a hybrid twist to me.

thomas.wong1986 says

Even if you bought Cisco, Intel, Microsoft, SunMicro, or Oracle.. didnt do well either. That was all on the other side of the trade.

Right. The dotcom boom was a massive money transfer from the ROW into the South Bay economy, both the billions of VC money and all the post-IPO jazz.

This sort of bullshit graph is EXACTLY the reason for the recent proliferation of bear troll postings.

dodgerfanjohn says

This sort of bullshit graph is EXACTLY the reason for the recent proliferation of bear troll postings.

How do you figure? I think it's a good point showing that the FHFA graph that Thomas posts as gospel is really not. The trendline is open to much interpretation.

You're open to disagree, but one usually lists some reasons. eg--Clambo brings up a good point about wages.

tatupu70 says

How do you figure? I think it's a good point showing that the FHFA graph that Thomas posts as gospel is really not. The trendline is open to much interpretation.

The point on the FHFA graph is not the trend line. Indeed, the trend line didn't serve as a resistance for Detroit and Las Vegas. The point is 100% of all bubbles deflate completely, and this one, has a long way to go.

Trend line has the correct slope, but the wrong direction. Doesn't take into consideration all the under qualified buyers that should not have been part of the buying pressure. That means the graph has a real and an imaginary component in the past. It make the future prediction based on the past results complicated. If you removed the imaginary then it would be pretty straight forward. The trend is down. Not a wish, a fact and the earlier everyone starts to realized this the quicker we can feel that sharp pain and start the recovery process. I own 4 homes so am really not hoping for this, but also like crunching numbers and the numbers tell me we the majority are in denial.