patrick.net

robertoaribas says

you really don't have the intelligence to be in this dicussion. not by a long shot.

I agree you are stuck in your own mind set.

Past performance doesn't guaranty future returns.

Depending on what new construction sell for in your area, the lot is worth about 30% of sale price, so your lot went up to $100K, or there abouts.

That doesn't make it worth $300K to any one other than you, the bank, and some one who might buy the property.

robertoaribas says

"the loan is the value" ok, so I guess my homes that don't have loans are worth nothing....

You are right, the dirt has a value that may be closer to a cash value, but the structure, and dirt combined are worth what a bank is willing to lend. That's the price you will sell for. You'll look at loan amounts surrounding your property, and say that is your value.

It's the amount a bank is willing to lend.

Where have you been?

robertoaribas says

you claimed homes depreciate, yet somehow my home which was worth $20K in 1968 is worth $200k now?

The structure does depreciate.

You're claiming your house is worth X number of dollars, and I'm not buying it, literally. By my quick calculations according to what you have provided I would put the value on that home at $115248.

OK, you as a buyer, what value would you rather pay, my $115248, which is what it's worth, or your $300K?

You're going to want to pay the lesser amount which is closer to value, but the bank is saying they will lend $300K on the same property.

You as a seller would want what the bank will lend, no matter what the actual value of the property is.

So we are stuck in a market place where the bank dictates values, based on loan amounts. Isn't that kind of crazy?

Buyers need to wise up the same as you did, and start paying less for property.

See how that works, when you pay less for a property you are a smart guy, but when you sell you expect someone to gift you more.

Why won't future buyers be smarter, like you were, and pay less for property?

E-man says

You paid over $300k

nope... $300K was the mediam for homes (mansions) in Marin or mansion in LG hills or
large home in Silver Creek golf country club...back then we had Condos at Forbes Mill going for $150K..

try something around low $200K in which prices were around 3.5x incomes..
with med inc. being around $50K.

E-man says

Your house is tripled now, but wages have doubled

at best wages have gone up 50% max (vs 35% inflation) within same positions and titles. Prices certainly skyrocketed well beyond inflation and incomes regardless of borrowing costs.. and you missed that savings rates have plunged to zero..

frankly.. other factors have also pushed incomes to be in check.. and not out of control.
thats why we have more employees in other states vs locally... cheaper!

E-man says

and the borrowing cost is at 1/3.

borrowing rates vs prices mean nothing...

we saw this before in 1989 to mid 90s as BOTH prices and rates declined...
as we saw recently prices get cut by half ..

we certainly didnt see prices of other goods double/triple beyond inflation as
interest rates have fallen since 1990. very little to no impact regarding
the relationship between prices and interest rates... else why did prices fall.

robertoaribas says

the question is, like everything david losh says, unsensical. I paid what the market said my home was worth at that time. for the one I live in, that was $230K, plus a quickly needed $20k in remodelling;

translate... the seller asking $250K.. the buyer offered $200K... and you come somewhere in between. But Roberto many not want to disclose that.

robertoaribas says

the question is, like everything david losh says, unsensical.

That's a bit unfortunate.

It is still way cheaper for me to rent than buy in the RBA. Outside if telecommute possible, way cheaper to buy 200 miles away and fly 1-2x a week.

robertoaribas says

the market is what it is, do what is best for you.

I never checked, but that sounds like what a Real Estate sales person would say.

Walking your dog on a moon light night? WTF? That's the value for your debt? Then you call me a philosopher.

OK, you got me, yes your lot has a value, a cash value, we can always build something better on your lot, the building technology seems to be progressing well.

The rest of it is the blue sky you are selling here. Walking the dog, raising the kids, making sure the kids get into the right school. Real Estate agents, and banks prey on this kind of thinking.

It's all numbers, it's always been all numbers. There is money in, money out, and what you pay per month. As an investor you count rental income, for mom, dad, the kids, and the dog, it's all just an expense.

Now in 1999 the banks changed the way they do business: http://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bliley_Act

It allowed banks do do the accounting of your mortgage differently. This is where banks were allowed to package, insure, and repackage mortgages. So banks no longer needed to care about the value of the property, they just had to make the loans.

Are you following along so far?

Now let's talk about you buying a condo for $50K, but four years later it's worth $100K. Is that by magic? Is that by sound financial reasoning?

When you say that property has appreciated 12% per year last year did wages go up 12%? Did the economy grow. or banks simply padding the balance sheets because of some panic buyers?

If you really wanted to discuss you should look up from your sales data to what is coming, which is banks dumping Real Estate because they are already played out.

That's just my opinion.

SJ says

@E-Man yeah but Morgan Hill is hella expensive now!

http://www.zillow.com/homes/for_sale/morgan-hill,-ca_rb/

Why pay this much when I can stay in RBA and buy home for similar cost?

Same deal is happening to the east bay real estate because the lemmings are willing to get stuck in 2-3 hours traffic each day commuting from east or south bay. I can fly 100 miles in 20 minutes where real estate is DIRT CHEAP

I see. They have gone up quite a bit too based on what I see with a subdivision I'm familiar with. There's one townhouse at 2130 Darnis Circle that just hit the market for $500k. These identical townhouses were selling in the low $300k just a year or two ago.

Well, there's one gentleman that works for Google. He flies in everyday. It should be fun. There's nothing wrong with that.

@New Renter,

It's a 2-year lease. I can't reveal his title and who he works for.

David Losh says

Now in 1999 the banks changed the way they do business: http://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bliley_Act

It allowed banks do do the accounting of your mortgage differently. This is where banks were allowed to package, insure, and repackage mortgages. So banks no longer needed to care about the value of the property, they just had to make the loans.

David Losh says

Now in 1999 the banks changed the way they do business: http://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bliley_Act

It allowed banks do do the accounting of your mortgage differently. This is where banks were allowed to package, insure, and repackage mortgages. So banks no longer needed to care about the value of the property, they just had to make the loans.

no different than decades past as GSE/FHA was packaging mortgages as debt securities.
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Why everyone went ape shit over bidding overpaying over leveraged.. on real estate / housing is an unanswered question....

thomaswong.1986 says

Why everyone went ape shit over bidding overpaying over leveraged.. on real estate / housing is an unanswered question....

Because of the amounts that banks would lend.

After 2001 there was a big push to bolster the economy. Higher loan amounts made higher security amounts, made higher stock prices, made higher equity projections, and it was all good.

It's hard to fight that global economic all boats are rising feeling.

David Losh says

Because of the amounts that banks would lend.

why did the public feel the need to overpay/overborrow.. and if you have one home.. why not buy a second, why not buy a third.. we havent even touched the reasons to the issues... banks were not the problem here...the banks didnt create this crazy public infatuation ( or neurotic obsession ) with housing.. and look around.. its still there...its all about the public...!

David Losh says

It's hard to fight that global economic all boats are rising feeling.

no.. it means your fixing problems with the roof and pulling weeds on weekends...
not a great driver of economic growth...