patrick.net

robertoaribas says

Austinhousingbubble says

That's only because banks are actively manipulating supply in a last gasp attempt to reflate a bubble in order to hide their losses and collect fees -- a strategy that is temporarily working for them. IOW it has nothing to do with real inventory or supply and demand.

So, you want to balance your pure speculation, versus observable market supply and demand? Also, who cares, if prices go up 20% in the next year while we wait for this tsunami of foreclosures, what is to say they don't leak them out for 5 years and the economy improves? Then prices might never drop, or only drop a small amount...

I'm a data guy, you go do all of your guessing you like.

I think you're right about prices dropping a small amount or just staying flat over the next decade. The 20% increase may happen in certain areas where prices have bottomed and jobs are returning.

Since you're a data guy take a look at the demographics on the income and debt of the next wave of home buyers. Not promising for prices rising - especially when you consider that this group is outnumbered by the baby boomers they will be buying from.

RentingForHalfTheCost says

Because 1 out of 5 in this country doesn't work? Because real inflation is not 2%. Because 23% of home owners with mortgages are underwater. Because at the current rate of absorption the existing shadow inventory (not including the future foreclosures) would take 7 years. Because even if the gov't stopped paying all the public workers and services (no spending) we would still not even come close to paying down the debt in our lifetime. We actually wouldn't even get ahead of it! Because because because.

That is speculation? Huh?

Everything is so shitty. That must be the reason why Apple keeps selling more and more iphones and ipads, after all ...those are an absolute necessity for life...NOT. That's why restaurants are packed to the tooth. That's why the roads are full of new cars. That's why the traffic in LA has not changed a bit even though gas is at $4.50 at the pump!! ...

Hm...What you say is true, I am not arguing that but what I see is different. I wonder if its all skewed due to political reasons. Republicans want you to vote for them in Nov so they have to promote a "economy is a disaster" mentality because that would justify you voting for them...after all, they can fix it, right?
Democrats have the opposite approach...everything is better and improving by the minute, all because of them...so you gotta vote for them again.

One stupid game.

Glad we bought the end of February in Danville! Got the loan easily and a 3.75% rate. It was a fixer which we basically gutted (cheaply) and remodeled before moving in over Easter. We probably already have 20% equity and are happy! There were no games with this deal for which I am very thankful! Glad we will not have to worry about playing this Bay Area real estate game any longer!! Plus the payment is cheaper than rent and a much nicer/larger home! It all depends on the deal and your personal needs...

edvard2 says

So, just out of curiosity, the comments here seem to indicate either investors or folks looking for homes in the sub-400k range. I'd say that our range is at a max of 550k or so. We don't seem to be finding that much of a flurry of activity in that price range. So when people say there's " No supply", are we talking about the extreme bottom level of the market

We are in the city (SF) and looking for SFH under 615K.

Nothing.

sheltielover1 says

We probably already have 20% equity and are happy!

I'd think that one would know if they had 20% equity, given that you should be making sure that you are no longer charged PMI if that is the case. Glad you found something you like though.

1sfrenter says

We are in the city (SF) and looking for SFH under 615K.

Nothing.

You are far more familiar with SF RE than I am, considering you have lived there for a long time and have been watching it closely. Based on my limited knowledge of the place I have to ask: when was $615k ever going to get a decent SFH in a decent area of SF? 1990's?

I guess nowhere if you are hoity toity.

But there are places (decent SFHs) for that price in the Sunset, the Richmond, Sunnyside, Ingleside, Outer Mission, and Excelsior.

We've been holding out for something larger than 1200 sq. ft., but are considering some of the 2/1 we've seen (usually about 950 sq. ft, yard and garage) for under 500K.

Just do a redfin search - not every house in SF costs a million bucks. There are still regular people living here.

1sfrenter says

Just do a redfin search - not every house in SF costs a million bucks. There are still regular people living here.

Yeah, I'll take a look. I have never bothered to look up in SF since I have never had an interest in living there (mostly related to job locations). Some friends have rented out in Sunset & Richmond districts and they seemed like areas I wouldn't mind living in if I had the interest.

SubOink says

Everything is so shitty. That must be the reason why Apple keeps selling more and more iphones and ipads, after all ...those are an absolute necessity for life...NOT. That's why restaurants are packed to the tooth. That's why the roads are full of new cars. That's why the traffic in LA has not changed a bit even though gas is at $4.50 at the pump!! ...

Think about all the cash the underwater mortgage holders are saving by not paying the mortgage. I bet if you tracked the flow of money you would see it being spent on things like iPad, iPhones, autos, etc. These people are not stupid, they are getting a free ride in a screwed up housing market. The Ponzi scheme stopped and the difference here is the last ones holding are not necessarily doing that bad. The real victims are the ones that didn't over-leverage and lost their downpayment. The people who bought with nothing or hardly nothing down (and there were many) are laughing at the rest.

Also, Apple is not doing as well as it should in the US, iPhone/iPad/iPod sales didn't meet expectations here, it was the growth elsewhere that is impressive. 35 million iPhones! Wow.

Real Estate is local, I work primarily western Sonoma County and inventory is low right now. That will change at some point. I tell my buyers to get their finances in order and wait for the right place at a good price. A good price? 1998 price in nominal dollars. I do see multiple offers for some properties and I also see a lot of properties with no offers at all, those listings go stale quickly and you can sometimes get them for less than a comparable new listing after a few months. It's a lot like shopping at thrift stores, lots of crap but you never know what will turn up tomorrow. And anyone who treats the Bay Area economy as singular or any city as a unified market is a fool. I have met Greg Fielding and I will be sending any East Bay buyers I get his way because he will treat them right.

RentingForHalfTheCost says

Think about all the cash the underwater mortgage holders are saving by not paying the mortgage. I bet if you tracked the flow of money you would see it being spent on things like iPad, iPhones, autos, etc.

I know two couples - both relatives who are doing this right now. I must admit it makes me angry but I try not to show it because they are otherwise nice people.

In both of these cases they have just begun the short sale process. One couple stopped paying their mortgage - on advice from counsel -- in November 2010. The other couple followed their advice in June 2011. Both couples have been saving every penny. The lawyer told them that the short sale process, which is just starting for couple #1, will include a provision from the bank to reclaim some of the unpaid mortgage. If they are comfortable with the amount the bank asks for they will only have 2 years of bad credit. But if the bank asks for too much (i.e. more than the unpaid mortgage) they are going into foreclosure and live with the 7 years of bad credit.

RentingForHalfTheCost says

Also, Apple is not doing as well as it should in the US, iPhone/iPad/iPod sales didn't meet expectations here, it was the growth elsewhere that is impressive. 35 million iPhones! Wow.

Traditionally this is the worse quarter for Apple but because Apple's business is more global now, it is doing well because of Asia Pacific.

BayArea says

Home #3 (REO): This one is a fixer upper that needs a solid $30K to be move-in ready. It was priced way too high and I offer $30K below asking. I get this in the mail from the listing agent:
"Counter Offer - Need Highest and Best, there are 10 offers at this time.
Please submit by email your client's best offer. Please send details. It might be price, contingencies, earnest amount, etc… The bank will require the price on the contract even if property doesn't appraise.
NEED YOUR CLIENTS RESPONSE BY TOMORROW THE 25th OF April, at Noon."
NOT AGAIN! Rat bastards toying with people's emotions. I did raise my offer by $11K however. Let's see what happens.

Guess, what. I am eagerly anticipating an update on this house when I get the following notice from the listing agent:

Counter Offer - Need Highest and Best

Please submit by email your clients best offer. There are 10 offers in at this point. If no changes please email that, if you are making changes please send details it might be price, contingencies, earnest amount, etc… The bank will require the price on the contract even if property doesn't appraise.

NEED YOUR CLIENTS RESPONSE BY TOMORROW THE AT 2:00 PM – if you are increasing purchase price, make sure you include proof of funds, pre-approval, etc..

ARE YOU KIDDING ME! They did not accept an offer during the first set of offers, they did not accept an offer during the second set of offers, and now they are asking for third round of offers?!!!!!!?!!?!!!?

This is a great way to reallllly piss someone off.

You should have offered to feed the squirrels.

Ok, it's official.

I have not gotten an offer accepted in all of 2012.

Between taking the time to research properties, going to see them, writing offers, and chasing the listing agent only to find out that my $20K above asking price offers are getting laughed at, it's getting quite discouraging.

BayArea says

Ok, it's official.

I have not gotten an offer accepted in all of 2012.

Between taking the time to research properties, going to see them, writing offers, and chasing the listing agent only to find out that my $20K above asking price offers are getting laughed at, it's getting quite discouraging.

5 months of trying is not a lot (and never has been) if you want the right house for the right price - start complaining again after having tried for 2 years ;) Our culture in general has moved to expectations of instant gratification and that play into the hands of the sellers/realtors ..

E-man says

I'm afraid we will get another recession next year.

I thought we never got out of the last one. :)

BayArea says

Are you kidding me? 25 offers and instead of taking the highest/best offer, the bank scraps all offers and requests that everyone resubmit a higher offer? Really, this is actually legal?

They are under no legal obligation to accept any offers, or they could accept the lowest offer, or pick one at random. There's nothing to say they have to pick the highest offer. They only thing you could do is sue if they are picking offer for only white people and rejecting all offer from black people, this would be discrimination, but it's tough to prove. Unless there is some kind of confidentiality clause in the offer, they could send everyone a list of what they bid and tell them you need to do better. Or say they current highest offer is 502k, you need to do better.

E-man says

Either you thought wrong or you personally never got out of it. I definitely did. We are in a much better shape financially compared to 2006 and 2009. Choose your poison. :)

You realize that individual success does not automatically translate to national?

E-man says

However, millions of people are better off now compared to 2008 & 2009.

Yeah sure. They are better off after dumping their over expensive shacks and were forced to live within their means. That's how I see it - you wear yellow glasses so you see everything yellow - not your fault. :)

E-man says

Or was it because no one is willing to overpay for your skills anymore? :)

Haha. I have my stock investments that brings in the returns that you get collecting rent. :) I am like you - an exception. Millions are not better off but I do - hence the economy is doing soooooo gooooood.

thomas.wong1986 says

BayArea says

"Counter Offer - Need Highest and Best, there are 10 offers at this time.

Please submit by email your client's best offer. Please send details. It might be price, contingencies, earnest amount, etc… The bank will require the price on the contract even if property doesn't appraise.

Nope this practice hasnt stopped.. even though prices have fallen..

Fact is, prices over couple years have fallen and that provides some proof, that multiple offers really arent there.

You still get counter offers? Of all the 20 offers I've submitted not once did I get asked to submit a counter offer. It's usually submit your best offer. The highest I've gone was offering 15k over asking and still told it wasn't high enough.

supersunken says

thomas.wong1986 says

BayArea says

"Counter Offer - Need Highest and Best, there are 10 offers at this time.

Please submit by email your client's best offer. Please send details. It might be price, contingencies, earnest amount, etc… The bank will require the price on the contract even if property doesn't appraise.

Nope this practice hasnt stopped.. even though prices have fallen..

Fact is, prices over couple years have fallen and that provides some proof, that multiple offers really arent there.

You still get counter offers? Of all the 20 offers I've submitted not once did I get asked to submit a counter offer. It's usually submit your best offer. The highest I've gone was offering 15k over asking and still told it wasn't high enough.

I dunno why people keep posting this stuff as if its sufficient to assume such info is contained in a vacumn.

List price means NOTHING.

Comps are all that matters.

If you are near comps, then fine. As long as some mindless bozo doesn't come along with a stupifying bid, then you are at least in the running assuming the realtor isn't shady(I know, a long shot) and the owner isn't delusional.

But if the listing agent put the property at $250K when nearby comps are $350K, its an attempt to initiate a bidding war and your paltry bid of $15K over list will likely be ignored and mocked.

BayArea, and everybody else dealing with English-speaking real estate agents: does everybody write this badly? I realize that e-mail is more casual than paper correspondence, but BayArea's agent sent a message with so much botched and missing punctuation that it's hard to believe that it was written by a professional.

Please submit by email your client's best offer. There are 10 offers in at this point. If no changes, please email that; if you are making changes please send details: it might be price, contingencies, earnest amount, etc.

And the letter was asking for more money, to boot!
Come on, agents and sellers: start treating your customers with some basic respect.

Michinaga says

BayArea, and everybody else dealing with English-speaking real estate agents: does everybody write this badly? I realize that e-mail is more casual than paper correspondence, but BayArea's agent sent a message with so much botched and missing punctuation that it's hard to believe that it was written by a professional.

Please submit by email your client's best offer. There are 10 offers in at this point. If no changes, please email that; if you are making changes please send details: it might be price, contingencies, earnest amount, etc.

And the letter was asking for more money, to boot!

Come on, agents and sellers: start treating your customers with some basic respect.

With the typical realtor taking 3 months to become a "professional," this isn't surprising.

I just submitted another offer today on a short sale... 18% above asking price this time but right in line with the comparables. F-you banks for coming in 18% below 2012 comparables and creating a bidding frenzy (where 90% of the offers are made by individuals who aren't interested in the property at market price anyway). Just creating a bunch of unncessary paperwork for everyone.

BayArea says

18% above asking price this time but right in line with the comparables.

Nope, didn't get it. What's a guy to do?

There is a lot of variation throughout the east bay. I am looking in Alamo and Danville and am not experiencing any bidding wars, frenzy or otherwise. In those two cities it looks to me like a buyer's market.

Can you tell us what cities each of these houses are in?

Biff

If there is any heat, I would guess it is on the lower end of the market where people are buy rental properties. What are the asking prices of these homes? Under $250k, $250 - 500k, $500 - 750k?

Biff

Biff,

I don't doubt that the affluent areas like Danville and Alamo show no bidding frenzies.

I'm looking in parts of the East Bay where $300K will get you 1750sq-ft, 4-bedrooms, and a 2 car garage

In 1995 I was looking to buy in San Jose, Willow Glen specifically. There was a lot of competition. I put in the highest bid on several properties only to lose out to all cash offers who would counter at my price. I always suspected that the all cash offers might not have been all cash.

After two years of this, I noticed that the price increases had made Willow Glen as expensive as Saratoga. I had lived in the area all my life and I knew this did not make sense. Willow Glen had ramped up and Saratoga had not. I purchased in Saratoga with considerably less competition and watched the price of my place shoot up from there while the price increases in Willow Glen slowed down considerably. I was very happy that I never closed a deal in Willow Glen.

I no longer participate in highly competitive situations. It seems like a loser's game. It is often the case that by the time many people are buying, the gains are already gone.

Phoenix is experiencing bidding wars for rental properties and there is some analysis that says the prices being paid by investors are too high.

http://www.cnbc.com/id/47507232

You might consider looking in similar areas that are less competitive. If you are looking in Hayward, you might consider Pittsburg instead, or vice versa. There are 1,600 and 1,800 square foot townhomes near Blackhawk going for $350,000.

Biff

Biff Baxter says

I no longer participate in highly competitive situations. It seems like a loser's game. It is often the case that by the time many people are buying, the gains are already gone.

I often ask myself, "with 15 or 20 offers on the table, what kind of investing am I participating in here???" The gain margins are thinner and thinner and the biggest dummy of the 15-20 ends up getting the house.

Since the bubble burst, it's brought single family home prices down to the $150-350K range in cities like Pinole, Hercules, Concord, Antioch, Pittsburg, and Martinez (I'm purposely ignoring Richmond and Oakland because of how poor the areas are in that price range - I have no interest there). That's opened up a whole new middle class investor world that didn't exist prior to 2009. I know two people personally who own multiple rental properties in the areas mentioned above on sub $100K day job salaries.

Biff Baxter says

After two years of this, I noticed that the price increases had made Willow Glen as expensive as Saratoga. I had lived in the area all my life and I knew this did not make sense. Willow Glen had ramped up and Saratoga had not.

You are absolutely right and this is what we are seeing now. I will have to do some research to back it up, but because it's the cheaper areas that are experiencing the frenzies, it's squeezing prices up in those areas. The sweet spot seemed to be between mid 2010 through the end of 2011, at least in the East Bay. All of a sudden in 2012 it's like everyone is hip to the real estate investment scene. I mean, I can't even get together with some friends for lunch without the topic of real estate investment coming up when a year ago we were talking basketball and stock market, lol ;-)

I will say that if the inventory today matched what it was 1 year ago, I'm sure I'd have a couple rental properties in 2012. Can't lose sight of that glaring inventory fact in 2012.

FB flopped. Market stinks. Labor participation rate is lowest in decades. Interest rates are foolishly low.

The money for this just doesnt exist, its a leveraged ponzi scheme with an asset that is the least-liquid possible.

This is ridiculous, and Im not playing, Im done, Im saving up and moving out. This place is stupid, the quality of life here is terrible, the schools are shot and most everyone is pretending to have money they dont. Total foolishness. Enjoy Wall Street Version 2.0. The boiler room is not a fun place to raise a family.

Where are you going sir?

I don't understand the Bay Area here. But in any case, no way would I buy. I don't care how good of a deal it is.

contrary to popular belief it's actually not easy to buy a house right now. Which is part of the reason why prices are down.

You pretty much need to pay all cash if you expect to have any chance at competing on the best deals.

rooemoore says

I know two couples - both relatives who are doing this right now. I must admit it makes me angry but I try not to show it because they are otherwise nice people.

In both of these cases they have just begun the short sale process. One couple stopped paying their mortgage - on advice from counsel -- in November 2010. The other couple followed their advice in June 2011. Both couples have been saving every penny. The lawyer told them that the short sale process, which is just starting for couple #1, will include a provision from the bank to reclaim some of the unpaid mortgage. If they are comfortable with the amount the bank asks for they will only have 2 years of bad credit. But if the bank asks for too much (i.e. more than the unpaid mortgage) they are going into foreclosure and live with the 7 years of bad credit.

------------------------------------

This is an interesting story. I know one person who was short selling her house for the last 3 years. She paid her Realtor to keep her as long as possible in that house. The Realtor almost didn't advertise, kept the selling price at the rediculous level, refused to take offers and all tricks possible. During that time she was able to recover her down payment and beyond.

The worst thing about todays market is that Realtors have taken note that everyone is looking for a deal. So there are now what I call "false deals" where the asking price seem too good to be true, but similar to the actual deals you could get not too long ago.

it's only listed at that price because the real estate agents are trying to encite a bidding war.

Its rather amazing how people are so easily suckered into the same old scam.

Don't buy this junk. There are some idiots who still buy only to repent later.. I have seen many

I saw houses for 1.5 years in East Bay. I decided not to buy these Dilapidated 50 to 60 year old OVERPRICED houses.. Imagine in 30 years, by the time you pay off the mortgage they will be close to 100 years old houses.. Have you seen a 100 years old house? It looks so dated that you won't even want to go inside. Same will have to your house in 30 years. If you are thinking of leaving inheritance to you kids, what do you think you will give them?

I finally bought a brand new house (Still being built), 2700 sq Feet, 5 Bedroom/3 Bath on a 6000 sq Ft lot in Gilroy. Yes my commute grew by another 20 minutes but other than that I am more than happy for what I got for 510K! Great schools, great price, great house. What else do you need.