patrick.net

Look - there is INFINITE room for int rates to go down.

What is more likely to happen:

1. Fed reserve raises rates or leaves them at 3% mortgage level and 'the world ends', RE prices crater, stock market tanks, riots in streets

2. Fed reserves continues to buy all mortgages/lowers rates to 2% then 1.5% then 1% for the next 20 years and RE prices go up - stock market goes up - cities get enough income to pay cops, no riots.

Easily its #2. They have PROVEN they can make prices go up despite there being no jobs and huge defaults and huge inventory of non payers squatting. Fundamentals did not matter in CCCP and they dont here in US now or in future.

Big hand of big gov only gets bigger (until collapse, then repeat). Its a looooong cycle.

Please explain how/why rates cannot be at 2% for a mortgage? easily they are already there almost.

Pocky, #2 just happened. "This time, the QE will take the form of purchasing $40 billion in mortgage-backed securities a month until the labor market improves (i.e. indefinitiely)." ZIRP confirmed until at LEAST 2015. See for yourself, the stock market got hyper-juiced in the last hour, gold and silver are up. House prices are going up as a result, at least in the SFBA where so many people receive compensation in the form of stock.

We have been driving toward that fiscal cliff. Well, the driver just mashed the gas pedal to the floor.

http://finance.yahoo.com/blogs/daily-ticker/bernanke-bazooka-open-ended-qe3-very-aggressive-says-173314037.html

Real interest rates are already negative. Cash sitting in a bank account loses its value via inflation faster than nominal interest can make up for it.

Thank you Bernanke. Hope you and your buddies in Big Finance enjoy your free money at my expense.

freak80 says

Real interest rates are already negative. Cash sitting in a bank account loses its value via inflation faster than nominal interest can make up for it.

Thank you Bernanke. Hope you and your buddies in Big Finance enjoy your free money at my expense.

We're little fish. We have to play their game, or we're going to lose. If you don't want to get screwed by inflation, do something with your money to get some yields. Where do you go and get some return on your money as well as return of your money? RE seems like a safe bet to me. Gold might go up, but it doesn't produce any income.

Some countries, even Germany is selling bonds at negative interest rates, even our own Tbill is only .20% Some banks are beginning to charge to hold your money, if you use a SDB to stash your gold/silver they charge you. Lots of people with their hands out, from bankers all the way to the poor. The trick is to keep the money flowing one way or another.

E-man says

4.5% fixed interest rate on the property for the next 30 years.

Friend at work just got 3.275% for 30 years with no point. I charge him more than that when he needs me to spot him on lunch money. I told him he is living in Gov't subsidized housing now. He is a PhD with 20 years experience. A very sharp guy, one of the best in his field, and he needs a hand-out from the gov't to buy a house. Nice.

E-man says

freak80 says

Real interest rates are already negative. Cash sitting in a bank account loses its value via inflation faster than nominal interest can make up for it.

Thank you Bernanke. Hope you and your buddies in Big Finance enjoy your free money at my expense.

We're little fish. We have to play their game, or we're going to lose. If you don't want to get screwed by inflation, do something with your money to get some yields. Where do you go and get some return on your money as well as return of your money? RE seems like a safe bet to me. Gold might go up, but it doesn't produce any income.

Learn from your victory. Prosper from your failure.

Prefer stocks over RE because I can set stop limits for when the next crash comes and sell automatically or within a mouse-click. Would hate the feeling of being stuck with anything for too long when the tide turns. Gold might go up? It rocketed from lows to high after the bazooka was announced. Free monies for everybody! ;)

Or, quoting the NAR, "Now is an incredibly good time to buy or sell real estate." :)

tclement says

Or, quoting the NAR, "Now is an incredibly good time to buy or sell real estate." :)

If they were being more open and honest in their words then the above would read more like this.

"Now is an incredibily good time to give me two times your savings that has taken you years to accumulate".

Assuming 3.5% down and a 6% rob from NAR (national assembly of robbers)

RentingForHalfTheCost says

"Now is an incredibily good time to give me two times your savings that has taken you years to accumulate".

Better than working every day! With that much money at stake, I expect the robbers to come out.

E-man says

RE seems like a safe bet to me.

I'm considering a house purchase in my area. RE is very cheap realative to rents here. But it's Corning, NY...the epitome of a "one industry town." If Corning, Inc goes tits-up or moves to Texas like everything else, RE will tank. Like nearby Binghamton.

Heck the local RE market probably tracks the GLW stock ticker pretty closely.

It's true. Andrew's prediction (which I shared), didn't come to pass. The market is far from fundamentals.

my bold prediction: wait a couple years and sell for 20% more than what you can get now.

SFace says

gregpfielding says

Here’s a bold prediction: There will be a record number of new listings in San Francisco this September.
Why? Simple: It’s an unbelievably good time to sell real estate.

Epic Fail, unless you mean record low. It's bascally one month supply for a region of 8M people.

Inventory San Francisco

Dec 2012 6,798
Nov 2012 8,173
Oct 2012 9,366
Sep 2012 9,894
Aug 2012 10,154
July 2012 10,674

Sep 2011 19,068

http://www.deptofnumbers.com/asking-prices/california/san-francisco/

Actually, these numbers do not include San Jose, but yes, they are very low indeed. The real question is when will inventory bottom? It's not like it can continue going down to zero and that's the end of the RE market as we know it. At some point, it must rise.

tannenbaum says

It's not like it can continue going down to zero and that's the end of the RE market as we know it.

It would be very amusing though. The CAr would starve to death. Bwahahahaha

Here's an updated blog post on it:

http://bayarearealestatetrends.com/2012/12/18/bay-area-housing-inventory-half-of-last-december-asking-prices-up-56/

tannenbaum says

The real question is when will inventory bottom?

Tough to say without really understanding why it's so low. Yeah, foreclosures are down, but that's only a small fraction of it. And, there was even more negative equity in the last few years than there is today, so that's not it.

Herd mentality maybe. I dunno.

SFace says

gregpfielding says

It's true. Andrew's prediction (which I shared), didn't come to pass. The market is far from fundamentals.

It's your prediction as you signed off on it.

Sorry, but saying record inventory when the opposite happened is an epic failure. Blaming the fundamental just demonstate your incompentence as it should be accounted for.

Greg: You should sell your house now before inventory floods the market

Seller: ok

Seller 3 months later: What happended to the flood of inventory you talked about? I sold too early.

Greg: Market is not following fundamentals

Seller: WTF does that mean? Not following fundamentals, seriously?

So what? if the seller sold for a profit then a profit is a profit and you cannot go broke making profits. This mentality of trying to time the highs is exactly what leads to the next crisis when prices crash again and then it's all poor me, let's get another taxpayer bailout! I seems like a suspiciously high amount of patnet posters always make the perfect trade with housing, but I have easily left $20K on the table a couple of times by selling stocks too early, it beats losing your ass though. If you want to treat housing like a riverboating stock casino, fine, just get rid off all the deductions and bailouts first and let the taxpayer off the hook - or maybe Patrick can add a fantasy housing section where we all can make bets and gamble against each other a little bit so everybody can bet on housing without buying RE or REITS ;)

SFace says

mell says

So what? if the seller sold for a profit then a profit is a profit and you cannot go broke making profits.

Greg and his group was adament that Sep 2012 was an "unbelievably good time to sell".

Sorry, that is just not the case and simply horrible advice.

Horrible? How much have prices risen since then? It's a bit early to make that call. If I tell somebody I'd sell AAPL at $600 and it goes to $750 but then drops to $450 I'd consider that a good call, even if it doesn't drop for a while. Staying with 10%-15% of the top is not that bad, isn't it?

Ok. I see you've added so far, I can go with that.

SFace says

mell says

So what? if the seller sold for a profit then a profit is a profit and you cannot go broke making profits.

Greg and his group was adament that Sep 2012 was an "unbelievably good time to sell".

Sorry, that is just not the case and simply horrible advice (so far).

Easy tiger. First, I'd recommend you actually read the Andrew's article. Then, I'd recommend you actually look at his body of work.
http://bayarearealestatetrends.com/author/schnageler1/

He's one of the good guys and even wrote a book about the horrors of NAR. He should actually be a favorite of patnet.

http://www.amazon.com/Homeownership-Any-Cost-Association-ebook/dp/B006FTIIW2

robertoaribas says

Well, my reliance on supply, demand, foreclosures rates etc. seems to be proving itself again... even in markets other than phoenix. Prices up, selling in September was a bad idea, as I predicted!

Yep. As long as supply is this tight, prices will continue to rise. The change will come at some point. It just wasn't this Fall.

SFace says

mell says

So what? if the seller sold for a profit then a profit is a profit and you cannot go broke making profits.

Greg and his group was adament that Sep 2012 was an "unbelievably good time to sell".

Sorry, that is just not the case and simply horrible advice.

I wouldn't be so quick to bury Greg for this. How lagging are the price indicators?

It's not like someone deciding to get out is selling and closing before the end of the month. I'd imagine the typical owner who says "honey it's time to sell" in mid September are included in the November or even December sales figures.

It's also worth noting that, in some spots around the Bay, September WAS the best time to sell.

Check out Danville, broken down into price tiers.

I had a Realturd call me earlier today and was telling what a great time it was to buy. He told me he had all his savings in Real Estate. I felt like telling him to "F Off".

gregpfielding says

Tough to say without really understanding why it's so low. Yeah, foreclosures are down, but that's only a small fraction of it. And, there was even more negative equity in the last few years than there is today, so that's not it.

Are numbers available for empty houses not for sale?

Building is very slow, right?

How many people missed 2005 and now are just holding on until prices get there again? Some of these people must have been the ones selling this spring/summer/fall as prices were significantly up.

evilmonkeyboy says

It seems like rents are dropping in the BA, they peaked (out of control) in the summer and now there are lots of rentals on the market. But what do I know I just rent here in the BA.

I'm moving out of the Bay Area at the end of this month. (my contract is over) My landlady is trying to get a $350 a month increase for a very small Millbrae area cottage. I'm currently paying $1,500 a month.

I wish her well, but that's a lot of money for a 400 sq ft property.

jvolstad says

My landlady is trying to get a $350 a month increase

That is a very real problem, that landlords think they are golden.

Is there apartment building going on in your area?

Mobi says

Since supply is low

I'd just like to say that every property on earth is for sale for the right price, terms, and conditions.

David Losh says

jvolstad says

My landlady is trying to get a $350 a month increase

That is a very real problem, that landlords think they are golden.

Is there apartment building going on in your area?

People looking in the bay area should look in the San Francisco (outer) sunset district. It's a bit far from the inner city (but hey, cycling is good for ya), very close to the ocean, no cars, hardly any crime, quiet, good air, the houses are a bit dated on average but you can get a $1700 sqft 2 1/2 bedroom for $2300 here. No rent increases.

David Losh says

Mobi says

Since supply is low

I'd just like to say that every property on earth is for sale for the right price, terms, and conditions.

Certainly, mines are for sale if you are willing to offer me the right prices. My guess is the supply will come back as long as prices keep increasing. You just have to guess where is the rolling-over point. I suppose you can make up a metric like Roberto to predit that.

robertoaribas says

or, you can just use my metric! It worked for selling in 2004-5, it worked for buying over the past two years...
http://robertoaribas.wordpress.com/2012/09/03/when-to-sell-a-home-especially-in-a-bubble/

But like I said in another post, Europe is a wild card here. Housing was the root cause of the 2008 financial melt down. So, for people keeping a close eye on the housing market like Roberto, it is not too hard to sell the houses before the sharp down turn. However, housing is not the only thing that can cause a financial collapse. If one of the stressed countries defaults on their government debt, potentially it would create turmoils in the banking sector and propagating here. But I suppose it is not too hard to see the writing on the wall.

SFace says

gregpfielding says

It's true. Andrew's prediction (which I shared), didn't come to pass. The market is far from fundamentals.

It's your prediction as you signed off on it.

Sorry, but saying record inventory when the opposite happened is an epic failure. Blaming the fundamental just demonstate your incompentence as it should be accounted for.

Greg: You should sell your house now before inventory floods the market

Seller: ok

Seller 3 months later: What happended to the flood of inventory you talked about? I sold too early.

Greg: Market is not following fundamentals

Seller: WTF does that mean? Not following fundamentals, seriously?

Hey, Greg got his take. From his perspective it was a slam dunk. Cha-Ching