patrick.net

donjumpsuit says

If anything, you can find shelter here. Far more shelter than you would in the "Redfin Forums".

I hate those self-entitled land barons on Redfin BA forum with a fucking passion. I read that forum for a while and it has nothing to do with buying RE. It is a bunch of douche-nozzle old-school landlords rubbing their hands together like midas and joyously discussing the their rising net worth and exchanging land baron tips and tricks.

donjumpsuit says

I doubt there will be one. I think more likely will be Japan style 20 year stagnation. Where prices remain at this level, but slowly inflation happens, and incomes rise to meet them.

That is what I'm afraid of.

Malkovich says

My accountant says to wait for the next downturn (LOL - he lives in a rent controlled apartment in tony Nob Hill - easy for him to say). But it seems the next downturn probably won't even be that much, maybe even just stagnation.

Your accountant is correct. Impatience can bankrupt you in this market. The debt level in this country is unsustainable and second, expenses are going up faster than the average income, the makings of a perfect storm for a hard landing in Real Estate. It's my belief that most of the RE in the U.S. is overvalued and only a few places have actually seen an honest price correction. Be patient, hold your money and wait it out. Check out Patrick's rent vs. buy calculator and other stories here confirming that it is better to rent and sit on the sidelines in most cases. Good luck!!!

mfs.admin says

Malkovich says

My accountant says to wait for the next downturn (LOL - he lives in a rent controlled apartment in tony Nob Hill - easy for him to say). But it seems the next downturn probably won't even be that much, maybe even just stagnation.

Your accountant is correct. Impatience can bankrupt you in this market. The debt level in this country is unsustainable and second, expenses are going up faster than the average income, the makings of a perfect storm for a hard landing in Real Estate. It's my belief that most of the RE in the U.S. is overvalued and only a few places have actually seen an honest price correction. Be patient, hold your money and wait it out. Check out Patrick's rent vs. buy calculator and other stories here confirming that it is better to rent and sit on the sidelines in most cases. Good luck!!!

Maybe. But Oakland is a refuge for techies priced out of SF. That makes for a very different situation than most other markets.

New Renter says

Maybe. But Oakland is a refuge for techies priced out of SF. That makes for a very different situation than most other markets.

Yes, I considered that.

mfs.admin says

Your accountant is correct. Impatience can bankrupt you in this market.

I hope you are correct. Though I wonder if a crash would even have an effect on the oh so magical SF Bay Area.

Malkovich says

I hate those self-entitled land barons on Redfin BA forum with a fucking passion. I read that forum for a while and it has nothing to do with buying RE. It is a bunch of douche-nozzle old-school landlords rubbing their hands together like midas and joyously discussing the their rising net worth and exchanging land baron tips and tricks.

No offense, but isn't this what you are asking for here? Tips and tricks on becoming one of the land barons you supposedly despise? I am guessing if you bought 2 years ago you would be singing a different tune.

As a long time east bay resident I can tell you exactly what's happening: People from SF have suddenly decided Oakland is all cool. Its more that they couldn't afford SF anymore and so made the leap across the bridge. But I digress. Many parts of Oakland I used to feel a little uneasy walking around in during the day now might as well be a West Coast Brooklyn: You almost trip over the hipsters around there.

So that's basically the deal. Oakland is now the new "cool" place to move to and now that this the word is out, it too, like the rest of the Bay Area will suffer the same soulless gentrification.

Carolyn C says

He gave sound reasons why in the future there will not be a big real estate crash like last time

Those same reasons were given by investors during the last housing bubble. We all saw how that turned out. This time will be no different. Bubbles inflate, pop, and re-inflate. Such is economics.

New Renter says

Maybe. But Oakland is a refuge for techies priced out of SF. That makes for a very different situation than most other markets.

Techies who are the best and the brightest who spend all day spying on us to shovel ads in our faces. This latest crop of techies, the Facebook losers, are so bad with what they do with their brains this rubbish can't continue. They are also complicit with spying on us and sending that data to the Fedzilla.

Prices have not doubled in San Francisco, as the threadstarter stated. They really didn't seem to go down that much. They definitely never got affordable for me.

Per-household data

The Fed's Flow of Funds report shows only aggregate net worth. If you want to know what the average household's net worth is, you'd have to look the Fed's triennial Survey of Consumer Finances. The most recent survey, published in June, showed that inflation-adjusted net worth fell dramatically between 2007 and 2010.

The median fell 38.8 percent to $77,300. The average fell 14.7 percent to $498,800. The average (or mean) is pulled up by a small number of very wealthy households. The median is more typical because it's the point at which half of households are above and half are below.

The report said the decrease in median net worth was greatly influenced by a collapse in home values. If you remove the primary residence and mortgage, the median fell 29 percent over the three-year period, to $29,800 in 2010.
http://www.sfgate.com/business/networth/article/Household-incomes-net-worth-rising-4346405.php

http://www.federalreserve.gov/releases/z1/Current/

So true. But where some decry a loss of identity, the truth is that there is a lot of money being poured into areas where they desperately need it. The restaurants are more full. The shops are selling more stuff. This all bodes well for the future of the City.

edvard2 says

Many parts of Oakland I used to feel a little uneasy walking around in during the day now might as well be a West Coast Brooklyn: You almost trip over the hipsters around there.

wave9x says

Malkovich says

I hate those self-entitled land barons on Redfin BA forum with a fucking passion. I read that forum for a while and it has nothing to do with buying RE. It is a bunch of douche-nozzle old-school landlords rubbing their hands together like midas and joyously discussing the their rising net worth and exchanging land baron tips and tricks.

No offense, but isn't this what you are asking for here? Tips and tricks on becoming one of the land barons you supposedly despise? I am guessing if you bought 2 years ago you would be singing a different tune.

Yes, had I bought 2 years ago, I would be singing a different tune. No arguments there.

In regards to the 6 or 7 landlords and flippers who practically live their lives on the BA forum over at Redfin? No, I am not like them and I don't think I ever would be. Their posts reek of arrogance as they smugly pat themselves on the back and put down any newbies asking questions.

Truth be told, 10 years ago I didn't have much money or a job. I had quit the corporate world. I was your quintessential slacker, traveling around, staying in youth hostels (often one of the older dudes in the hostel) and dive hotels. After three years of this I realized I should probably get my shit together and, almost by accident, started a business.

Now I am doing very well. I almost can't believe how well. My GF says I have "imposter syndrome."

So, no, I would never be a self-congratulatory douche like some of the posters on Redfin (I won't name names) that refuse to acknowledge that the perfect storm of our gov'ts monetary policies, rich techies, and money laundering Chinese have re-inflated the bubble.

Their delusions of grandeur will not allow it.

don't worry it's all a Sucker's Rally.

All crashes have a denial phase.

Doubled in 2-3 years? what are you talking about? you have data to back that up?
The example you gave was sold at 799,900/2 = 364950 in 2011? Is that what you saying?

bubblesitter says

Doubled in 2-3 years? what are you talking about? you have data to back that up?

I could find numerous listings and show you. I'll try to dig them up later.

I will qualify my remark in that I was referring to Oakland multi-units in zip codes 94610, 94611, and 94618.

It sounds like you a bit emotional rather then being rational. Try a model to model comparison and see where they are at the locality you are looking at.

Malkovich says

Oakland multi-units

How where they acquired? did investors snatched them at auctions? If that's the case than, may be.

Malkovich says

That said, I could have bought this building and within two years almost doubled my money. I can't believe the extreme lows and highs of this RE cycle - well, let me take that back, the lows did not even go that low (aside from in the ghetto or out in the boondocks - nice neighborhoods in Oakland or especially SF hardly even dipped).

You call a 30% haircut "hardly even dipped"? Look, I'm sorry to say this, but you missed your chance by about 2 years.

Malkovich says

I hate those self-entitled land barons on Redfin BA forum with a fucking passion. I read that forum for a while and it has nothing to do with buying RE. It is a bunch of douche-nozzle old-school landlords rubbing their hands together like midas and joyously discussing the their rising net worth and exchanging land baron tips and tricks.

Ugh. I left the Redfin forums a long time ago when the moderators started deleting posts from anyone who disagreed with the douchebags.

Malkovich says

bubblesitter says

Doubled in 2-3 years? what are you talking about? you have data to back that up?

I could find numerous listings and show you. I'll try to dig them up later.

I will qualify my remark in that I was referring to Oakland multi-units in zip codes 94610, 94611, and 94618.

Actually, more than doubled:

donjumpsuit says

here are more Chinese in SF than anywhere else.

Not true. There are over 100K more people of Chinese origin in NY-metro than SF-metro, and LA isn't far behind SF (only about 65K fewer).

It's certainly the narrative we've been given, but no one has ever presented much evidence that there is an en masse emigration of Chinese citizens to the Bay Area. The closest we've had is realtors claiming "all I heard was Chinese at my last open house." Plenty of people who have been here for 20-40 years might be speaking Chinese, so that doesn't mean anything. Anyone at an open house in Fremont might see only people speaking Chinese and Indian languages, but that doesn't mean all of those people are fresh off the boat -- far from it.

As for actual hard numbers, there has been an uptick in EB-5s, but it's still not that much overall, and USCIS is slow at processing them. You can see from the data that there is a backlog. This is through Q3 of 2013, and an I-526 is the initial petition, whereas the I-829 is after a successful investment of at least 2 years after which the petitioner can request a green card:

http://www.uscis.gov/sites/default/files/USCIS/Resources/Reports%20and%20Studies/Immigration%20Forms%20Data/Employment-based/I526-I829_performancedata_fy1991-2013_qtr3.pdf

As you can see, lots of people never make it to the I-829 stage and drop out of the program. State Department data showed that the number of EB-5 grants was probably less than 50% Chinese in the past, but is probably more like 80% Chinese now for EB-5s, so it's not insignificant, but it's not what realtors are telling us either.

However, all you have to do is look at the State Dept data for E visa categories to see that large numbers of Germans, Australians, Mexican, Japanese, and Koreans come here on E visas for investment or trading purposes. Why don't the realtors talk about these people? Not to mention the large numbers of French, Taiwanese, Italian, Spanish, and Canadian folks who get E visas too. I don't hear about these people either -- maybe they're paying in Euros and Loonies, too, eh?

donjumpsuit says

But Wall Street can borrow money for far less than it costs to use their own capital. They earn a return for that money though rent, and in a few years, will own the property outright, which will increase returns by lowering the expense.

Yes, Wall Street can borrow at much cheaper rates, so they pay cash. However, you don't understand ROI. If they own the property outright, they will certainly have a lower return. Whereas if the property is leveraged, ROI will be higher.

edvard2 says

Many parts of Oakland I used to feel a little uneasy walking around in during the day now might as well be a West Coast Brooklyn

Are you walking around the same parts of Oakland I'm walking around? Even my friends who own houses in Oakland have said that parts of the city that had been getting safer due to gentrification have started becoming more dangerous in the last 3-4 years. I've noticed it too when I've been there. Some of their Oaklander friends, especially the ones that have had kids since they moved to Oakland, have sold and moved because of this factor.

As for the dumps in East Oakland. Investors looking for a pay day could be one answer, but who knows. However, I'd have to see the actual properties to say.

Malkovich says

I hate those self-entitled land barons on Redfin BA forum with a fucking passion.

By the way, I don't think they're land barons, but rather realtors trolling the boards. Anyone who says something like "And remember to remove all of your contingencies and get pre-approved by a local lender who does a lot of volume in the peninsula" means they are a realtor, obviously. I refer to them as "the pre-approval ladies" when I see them.

Sign up for the next survey showing that people in the U.S. are just spending all their money on stuff like houses.

http://www.federalreserve.gov/econresdata/scf/scfindex.htm

Malkovich says

Who is buying this crap?

I’m wondering also.
There is no real return on money, except speculation or hide hot cash. When too much money chasing too little properties, makes every pig looks beautiful.
Everything is possible. As Google sold Motorola with 76% loss after a year or Mercedes-Benz wipe-out his cash on Chrysler purchase, or Japanese investors got burned on US RE investments in ’80.
When I was filling-up my tank with gas 3 years ago, I was thinking that this is the last time I am paying this price. Amazingly prices came back to the same level.

Here in dublin, most desirable properties cost 80-120Gs more than they did 2.75 years ago. If oaktown doubled in the similar time frame that these "hipsters" are even more delusional that they appear at first glance...

Don't forget that Oakland's home prices took a tremendous hit during the down turn. So it would make sense that the increases would be just as dramatic on the way back up.

Carolyn C says

Don't forget that Oakland's home prices took a tremendous hit during the down turn. So it would make sense that the increases would be just as dramatic on the way back up.

Um.... that tremendous down turn was a down turn from the biggest bubble in our history. Why would it make sense that prices increases as dramatically as it fell from a bubble???

Miike says

Why would it make sense that prices increases as dramatically as it fell from a bubble???

It wouldn't. Unless you want banks playing games with mortgage securities, going out of business, national downfall, yadda yadda yadda, apocalypse.

Oakland: come for the real estate, stay for the weather.

EBGuy says

Oakland: come for the real estate, stay for the weather.

And catch a bullet during evening stroll...

dublin hillz says

EBGuy says

Oakland: come for the real estate, stay for the weather.

And catch a bullet during evening stroll...

Oakland is not as bad as everyone makes it out to be. The bad PR comes from those that don't live in the area.

Carolyn C says

dublin hillz says

EBGuy says

Oakland: come for the real estate, stay for the weather.

And catch a bullet during evening stroll...

Oakland is not as bad as everyone makes it out to be. The bad PR comes from those that don't live in the area.

Shut it, you goddamn RE troll.

Oakland is one of the most dangerous cities in the US.

http://blog.sfgate.com/crime/2013/09/24/a-terrible-title-oakland-again-has-nations-highest-robbery-rate/

FunTime says

Please let's not fall victim to this idea that a market is called in two or three years. Talk to me in thirty.

This sums up the uselessness of the bearish advice on this forum. Who the hell can base housing decisions on a 30 year time horizon? And/or wait 30 years to see if the prediction is correct. He almost certainly won't be in the same house in 30 years.

Facebooksux says

Carolyn C says

dublin hillz says

EBGuy says

Oakland: come for the real estate, stay for the weather.

And catch a bullet during evening stroll...

Oakland is not as bad as everyone makes it out to be. The bad PR comes from those that don't live in the area.

Shut it, you goddamn RE troll.

Oakland is one of the most dangerous cities in the US.

http://blog.sfgate.com/crime/2013/09/24/a-terrible-title-oakland-again-has-nations-highest-robbery-rate/

I have a home in Oakland you idiot! And I am not a RE troll dumb ass. Man you are stupid. And yes I have kids.

Facebooksux says

Carolyn C says

dublin hillz says

EBGuy says

Oakland: come for the real estate, stay for the weather.

And catch a bullet during evening stroll...

Oakland is not as bad as everyone makes it out to be. The bad PR comes from those that don't live in the area.

Shut it, you goddamn RE troll.

Oakland is one of the most dangerous cities in the US.

http://blog.sfgate.com/crime/2013/09/24/a-terrible-title-oakland-again-has-nations-highest-robbery-rate/

You clearly are a pampered pansy afraid of your own shadow.

Malkovich,

I agree. Certain areas have doubled in prices since the bottom of the market. This 4-plex was foreclosed in August for $527k. Amazingly, it's pending for $730k as a REO . That's $200k spread. Even investors didn't think they could flip it for $730k. That was why no one bought it at the steps.

I wouldn't listen to your CPA's advice. If your CPA is any good, s/he would have a decent net worth and not be rented in a rent control area. If history is any indication, we have more room to run. How much more is anyone's guess. How would you feel about waiting for another 5-10 years for the next housing bottom only to see that prices are the same or even higher than they are now? How many more real estate cycles can you wait before you dropped dead? Being financially conservative cuts both ways.

I'm sorry for not being able to help you a couple of years ago when you reached out to me. 4%-5% commission was not worth the time and effort for me to research and help you buy these multi-unit properties in Alameda County. Had you looked for properties in Santa Clara County, I would have been able to help you out in a heart beat. On the bright side, you're making a lot more money now than ever.

In my opinion, now is not the best time to buy, but it's not the worse time either. I think home prices are at equilibrium to +/- 10%. No doubt some areas already sold for above peak prices, but interest rates are so cheap. They're more than compensated for the higher price.

Just put yourself in the investors' shoes. You bought whole bunch of properties at the bottom of the market. These properties have doubled in value, but your property tax basis was locked in at the bottom prices with 2% annual increase cap. At the same time, you locked in 30-year fixed mortgages between 3.75%-4.25%. Your primary residence is locked in at 3.25%-3.5% for 30 years. Give me a good reason why you would ever want to sell these properties when the tenants are buying you these houses and putting money in your pocket every month?

As usual, just my 2 cents. Good luck.

Homeboy says

Actually, more than doubled:

Haha...the fallacy of medians...keep believing.

E-man says

I'm sorry for not being able to help you a couple of years ago when you reached out to me. 4%-5% commission was not worth the time and effort for me to research and help you buy these multi-unit properties in Alameda County. Had you looked for properties in Santa Clara County, I would have been able to help you out in a heart beat. On the bright side, you're making a lot more money now than ever.

In my opinion, now is not the best time to buy, but it's not the worse time either. I think home prices are at equilibrium to +/- 10%. No doubt some areas already sold for above peak prices, but interest rates are so cheap. They're more than compensated for the higher price.

No worries E-man. I haven't found a place for lack of trying, believe me. There simply has been no inventory (RE multis) in my zip codes. I have submitted exactly 4 offers the last 2-3 years. I was out bid or, in one case, rescinded my offer.

I was also interested in another 3-4 listings but the listing agent either blew my agent off (never returned calls, said there was already a deal pending despite is being listed for sale for another month, etc.) or otherwise blocked any other bids to make a dual-agent sale.

I'm not giving up but it seems there is still a dearth of inventory and prices still going up. And now all this "Oakland is the new Brooklyn." Trying to stay optimistic and hoping something will come along.