patrick.net

4997 trolls have FOR SALE signs in April 2006.

PeterP, I consider your scenario more likely--at least in the BA.
Who else hears investors talk like there's air in the bubble?

PolishKnight writes:
When that expectation is gone and prices are clearly falling, there is no imperitive rush to buy. Renters will be only inclined to buy when prices have clearly stopped falling _and_ it costs them MORE to rent than to buy. This market pressure will probably occur as many people sell their homes (often at a loss) to become renters thereby driving up prices. But rentals should go on the market as banks and owners try to rent out their properties to avoid foreclosure or loss to offset this market pressure.

I agree, but I think the "rising rents" dynamic will work only in a closed environment. As for the S.F. Bay Area, I think that the exodus that is already trickling will become huge as a lot of folks realize that the big gains they were betting on (stocks or real estate) ain't coming, and what remains is having to pay the price for an area where your standard of living is far below what it could be somewhere else.

Also, so many folks have been out of work for years and have been hanging in only because the equity loans allowed them to. Once the home prices credibly stop rising (which will be in late 2006, the earliest), they will be outta here.

"You KNOW it’s a bubble when:

Absolutely sh*tty apartments being converted to condos like this absiolutely DUMPY 35 year old complex in Dublin:"

Amazing! I live in Dublin, too, and I know exactly where you are talking about. I'm gonna drive over there after work and have a laugh. :lol:

BayQT~

Absolutely sh*tty apartments being converted to condos like this absiolutely DUMPY 35 year old complex in Dublin:

http://www.thegreenwoodcondos.com/

@tannenbaum, BayQT,

Checked out the site and I couldn't find ANY photos that showed a good view of the interior or exterior --only a few slick studio close-ups of the 'happy' homedebtors. I don't live in the BA, so could you get a few snaps & post them somewhere?

If you mean that the rent should cover PITI that is a bit greedy. You are asking the renter to buy you the house in that case. PITI rent makes sense only for a short period of time when seller rents back. It implicitly favors the buyer.

It is not too greedy. When appreciation expectations are low, this can be the case. Rent always carries a flexibility premium.

You must be a very careful driver. I dislike the idea of having to pay up for dents or other wear and tear. If I own the car then I don’t care.

I think you are allowed two dents. :)

Also, if you own a car and get into an accident (non-total), your car will worth *much* less even after all the repairs because the frame damage will go on the record. There is no such worry for a leased vehicle. I specifically asked them about this scenario.

If you mean that the rent should cover PITI that is a bit greedy. You are asking the renter to buy you the house in that case. PITI rent makes sense only for a short period of time when seller rents back. It implicitly favors the buyer.

Unless it's a rent controlled dwelling, you can charge the renter anything you want, but that doesn't mean that the renter can't get up and leave to find a cheaper place.....that is why rent is controlled by supply and demand...and unless you were to put 2 or 3 illegal appartments into a SFH (this happens alot on LI), your chances of getting a positive cash flow in this market are very slim.

Jersey "Could not agree more. My wife and I purchased a condo 2 years ago. We could not stomach, nor justify the high cost of a house at that time, but found a 2 bed, 2 bath condo that we could purchase and rent out for positive cash flow, if need be. I would love to say we are geniuses’ or that real-estate is ‘prime’, but the truth is we looked at our cost to rent vs. owning, and this made sense. We call this place ‘an apartment we own, and happen to be renting to ourselves at the moment”
I am personally hoping prices drop to the point where I can buy a house without having to sell the condo (not possible at today’s nosebleed prices though)."

I totally agree with you. I've posted my info here months ago (no, I'm not a newbie...only lurking these days. :-) ), and I've done the same as you. My purchase, however, was 6 years ago. I live (rent) in the BA but my townhouse rental is in Virginia. Positive cash flow. Not from the beginning, but has been for the last 3 yrs after a refi. I consider myself a good landlord....making repairs as needed, which is what ALL landlords should do. Yes, rent has gone up over the years but has kept up with the rental market....not to gouge. If it happens to "pay for" the PITI, all the better for me. All I've done is carefully made moves that worked in my favor. Nothing wrong with that, right newsfreak?

BayQT~

tannenbaum,

Are you going to take any photos? If not, I'll try to do that this weekend. I don't have a digital camera or a phone cam, so I will use one of my daughter's cameras. I'm a "if I don't NEED it, I don't BUY it" kinda gal so I have yet to buy a digital camera. :-D

BayQT~

quesera Says: "frank: Where in the reports is the data you’re talking about? And what calculations are you making"

They leave many variables unmentioned in their report, so I took a very favorable (the best?) scenario from a buyer's perspective. Of the 3 areas they specifically mention, I used the household income from the wealthiest area (62.5K, compared with ~40K from the others and a state- wide median of ~40K). I then assume 25% down and 30yr fixed at 5.5% on the median single family house for the past three years (median price has appreciated ~50% over those 3 years in NY).

Even under this extremely optimistic scenario, and ignoring real estate taxes and such, the NAR numbers are way off.

On an aftertax basis, assuming close to 100% of the payment is interest and deductible and using the 62K tax bracket in NY, the ratio still exceeds the NAR's claim - though by much less - but again, my example scenario is extremely optimistic.

Yep...and I have a certified used Honda Accord....no car payments. :lol:

BayQT~

newsfreak,

I couldn't agree with you more. And for the record, landlords can be taken advantage of, as well. I remember back in the 80's when I first joined the "landlord club", I had a tenant who, although she had a full side yard to do with as she pleased, somehow thought it was ok to venture to the front yard. :-( She also started sending her rent later and later each month. Now, mind you, my spouse and I (I'm a currently single) were young pups in our early 30's and the tenant was my Mom's age. Hubby wanted to remain "the good guy" so I had to be "the bad guy" and lay down the law. Well, we got it all straightened out...thanks to me....and I saved us late fees that WE would have to pay had she continued on her path.

And yes, I took over control of MY front yard, thank you very much. LOL!!

BayQT~

And for the record, landlords can be taken advantage of, as well.

I remember this guy years ago (before the bubble) who bought a house near my Mothers to lease.... He said he had so much trouble dealing with the tennants and when they left a year or two later, they did so much damage to the house, much more than the deposit could cover. He told me "Being a landlord sucks.... I learned my lesson, I'll never rent a house again"....... shortly after that he put the house up for sale and after the house was inspected, he found out that there was severe termite damage to the foundation and couldn't get his asking price, to make a long story short, he was lucky enough to break even after finally selling it.

allah,

Wow! What I nightmare. I've heard of similar nightmares in the Bay Area. And of course it all depends on your skill at picking a good tenant. In some cases, you have to have a crystal ball. I'm lucky enough to have a great property management firm working for me and all tenants have been great. One exception....tenants' hubby fell ill and rents began to appear later and sometimes partial. She knew they were eventually going to be evicted so she waited until that happened. It was a sad situation. I think sometimes that if I had more bad experiences I'd chuck the landlord title, too. I value my sanity and peaceful living too much to deal with that on a regular basis.

BayQT~

"Well, one thing is for sure: The Greenwood Apartments uh, I mean Greenwood Condominiums, will slightly bring down the median/average prices for Dublin condos! "

Works for me! I won't be buying anything here until I see some realistic numbers. I'm ok with renting.

T, I'll see if I can get some photos this weekend then.

BayQT~

"That sounds more reasonable.

Yep. And I knew at the time that refinancing only made sense if you were going to own the property for at least (put # here) years in order to recoup the cost of the refi itself! So knowing that I wasn't sellling my property any time soon, I plowed ahead and took care of my business.

Folks just have to do their homework, and what's happening is that's what a lot of people are NOT doing. I don't consider myself smarter than anyone, I just like to research my options whenever I spent money to make sure I'm doing the right thing.

BayQT~

Wewa, good point. I was a bit suspicious about the claim too.

Nothing against people living in Sunnyvale, but unless you put in tons of marble bathroom, marble countertop, marble floor, marble swimming pool, I just cannot fathom an average 30-year-old Sunnyvale tract home going up from 800K to 1.4M in one year. Impossible.

juju, here's the link for you buddy:

http://tinyurl.com/8j8ld

When do you plan to cash in your fortune? I suggest you wait until spring. You'll make enough money to earn half of the Bay Area.

Best wishes, dude.

I mean to buy half of the Bay Area. Soon, we'll all be renting from trolls like juju.

In their own minds, of course.

juju is back! I still think that the name sounds like a food item.

Soon, we’ll all be renting from trolls like juju.

And live under a bridge?

I am happy that we have a dedicated juju-troll-buster. Thanks brightc!

Well, juju must be busy closing the purchase of another 5 units from Cupertino "Villa" recently. If history repeats itself, we shall watch juju paying his condos off next year, when each unit hits $1 million (Iraqi dinars!)

In the native tongue of the Tabuktu tribe, juju = sweeten pig feet.

juju, usted es lleno de mierda.

Troll,

The house looks like a POS, but according to you, the $1.4 milion is a good deal. Wow. Such wisdom. Such streetsmart (not).

I checked on the listing date, and apparently, that POS you call "house" in Sunnyvale has been listed since 05/04/05. Yup, you heard it right. May, 2005. More than six months ago. Where are the multiple biddings? They must be on Thanksgiving vacation early (in May).

In contrast to what you think, I do have $1.5 milion in my bank, and $10 milion more from my GOOG equity. If you ask me nicely, I might buy that barn, tear it down, and build some trailers for you to buy. I may even get thanks from the Sunnvale residents nearby for cleaning up an eyesore in their neighborhood.

I see trolls coming here more often than usual. It must be lonely waiting inside an open house while no one bothers to pay a visit.

Troll policy for this thread: I delete whatever I feel like. :)

I believe at some point, an invitation was made to trolls. What was I thinking?

I welcome everyone including trolls, except when I feel like deleting for no apparent reason. Hmm... :)