patrick.net

Real estate is in no way analogous to stocks

Stocks are assets (they pay dividends) but homes are liabilities to most people (they require mortgage payments). Of course homes are not stocks.

This only holds true is you don’t believe prices will fall significantly….otherwise you are kidding yourself…..nothing worse than waking up one day and saying….”wow, I could have had that instead”.

The implied land price is home value minus replacement costs. Since replacement costs are more or less stable, one can imagine the fall in land price when the housing bubbl bursts!

homes are liabilities to most people (they require mortgage payments).

...don't forget all the maintenance and upkeep, taxes and insurance!

The implied land price is home value minus replacement costs. Since replacement costs are more or less stable, one can imagine the fall in land price when the housing bubble bursts!

Excellent point, Peter P. "Housing Bubble" really means "Land Bubble".

"these houses look pretty cool! "

Cindy, you might enjoy this links as well:

http://tinyurl.com/82q2j
http://tinyurl.com/36cog

As I have predicted, DQNews is saying

Indicators of market distress are still largely absent. Foreclosure rates are low, down payment sizes are stable and there have been no significant shifts in market mix, DataQuick reported.

Do I get a prize? :)

The is the full article: Continued sales slowdown in Bay Area, appreciation flat

dqnews.com/RRBay1105.shtm

We are way past the peak... and most people are still looking up.

"We look at today's market as normalizing. Everybody seems to have gotten used to the records set last year and the year before. The fact is that last month was the third-strongest October since we started keeping records in 1988. It was about twenty percent above average," said Marshall Prentice, DataQuick president.

Ok folks,....it's safe to get in now....the market is normalizing!

Robert DeNiro (in Meet the Parents)

Good,...now we know where he gets his pep talk from......I'm still waiting for him to answer my question.

Is it always a good time to buy?

or better than that.....

Is it ever a bad time to buy?

October’s market seemed to think recession was coming. Now it looks like another boom. GOOG at 400. What a change in mere two weeks.

GOOG is just one stock right? SP, DJ, and ND are all in trading ranges AFAIK.

Nice new blog: anotherfuckedborrower.blogspot.com/

Another F@CKED Borrower
This Blog is the work of somebody 'in' the mortgage industry that is dedicated to educating people on how-not-to-become Another F@CKED BORROWER!! From now on, they will be called AFB's or FB's for short. Many of these people had NO business buying a house...but that is what happens when people get wrapped up in the mania of easy money. Now lets have a look at ANOTHER F@CKED BORROWER!

am posting for the first time here though i have browsing this site for a while... did you guys see the discrepancy between these 2 articles...

http://www.dqnews.com/RRBay1105.shtm

http://www.mercurynews.com/mld/mercurynews/classifieds/real_estate/13194043.htm

they seem to have the same sources but completely differing message and even differing facts (on the median price for santa clara county)?

what gives???

ok i get it... mercurynews is quoting the median prices for only SFMs while dq is reporting the median price overall..... but still very different messages though.

ok i get it… mercurynews is quoting the median prices for only SFMs while dq is reporting the median price overall….. but still very different messages though.

I think we should only quote prices for Google employee residences. :)

But there are still bubble denyers. There are those still hoping for a spring bounce or whatever it is they think it going to help them sell their overpriced $hitbox.

Let them deny. Reality is not known for its kindness.

What I am wondering is, were there this many denyers during the dot.bomb days...?

Yes. I was (and still am) working in IT and can recall being surrounded/pressured by all the amateur "investors" around me to 'get in the game while you still can', it's a new Paradigm, etc... I can recall walking around the office in late '99 and seeing all the eTrade streamers on overyone's monitors. There practically wasn't an employee down to the lowliest janitor who didn't have a substantial portion of his/her retirement in the Dot.coms. Any attempts I made at the time to question this investment 'strategy' were quickly and harshly rebuffed.

Is this just typical mania behavior?

Yes. Read Schiller for good historical examples from previous asset/credit bubbles.

The ranks of Bubble-Deniers grow ever thinner, per Motley Fool:

"Housing Experts Change Their Tune"
tinyurl.com/bqml9

I’m all for $$$ going back into stocks …. it usually means $$$ going out of real estate, generally speaking with not many exceptions ….

I rather have those $$$ going back into Ty beanie babies... they are so cute!

"...can recall being surrounded/pressured by all the amateur “investors” around me to ‘get in the game while you still can’, it’s a new Paradigm, etc… Any attempts I made at the time to question this investment ’strategy’ were quickly and harshly rebuffed.

Now doesn't the present situation feel so familiar? I actually had a dot-com brokerage business back then, and you could smell the winds of change months before it hit the news. It was so damn obvious then, and so deja vu now.

Yet, despite recent history, why do people fail to see the connection? Try explaining what seems so obvious, and they look at you like you're Gomer Pyle trying to explain quantum physics.

ND does show some characteristics of an uptrend. However, if you look at the bigger picture, the "bull run" is hardly impressive.

Sure it swings bigger than this all the time, but this time it felt a bit faster, since I was actually watching.

Stocks swing all the time. This is why people swing-trade. :)

This is totally OT, but take a gander at what slipped by my dock today:

http://tinyurl.com/8s7vf

There were two of these gunboats, and they appeared to be looking for a watercraft for over an hour, transversing all the local waterways. Who's out there...Al Qaeda on a sailboat?

Mind you, we're about 2 miles inland from the bay.

Just looking at the indices acutally doesn’t give the swing the full credit it deserves. Basically stocks like AMD, AMZN, BRCM all dropped 10% or more in October on the earnings day, whether they beat or missed expectation. Now they’ve all bounced back or even made new high.

Huh?

"I rather have those $$$ going back into Ty beanie babies… they are so cute! "

LOL. I'm afraid that was some of my family members' sole investment vehicle.

Peter P, I thought you were going on vacation? Please don't tell me you're hanging on on this blog from Hawaii or something.

Oh, and I have "inherited" a vast beenie baby collection from a relative, apparently to fund my childrens' college education or something. I'd better hurry up and get those soon-to-be-valuable-again pieces of crap out of my parents' musty basement.

There was apparently a macro fear in Oct. and now that fear is dissipating, justifiably or not.

Probably. The uptrend appears to be minor though, although ND is making higher highs and higher lows.

This just in:

Ameriquest Capital Corp. Lays Off 10% of Staff
"Subprime giant Ameriquest Capital Corp., Orange, Calif., late Thursday announced a 10% companywide layoff, excluding two divisions: wholesaler Argent Mortgage, and its auto finance division"

nationalmortgagenews.com/
(unfortunately, full article requires registration)

Ameriquest Capital Corp. Lays Off 10% of Staff

Looks like AG's money fountain is losing pressure!

Anyone else see the New Residential Construction report from the Commerce Dept. just released? It contains many big negative numbers, some of which are y-o-y changes!

So I guess my October prediction was just off by a few weeks. :)

There are usually far more bubble denyers than in the stock market because by definition, all RE buyers are doing margin trading so the potential loss is more ouchy for them.

When the RE market is 10% down, you typically see a bunch of bubblesitters jump in thinking that it is bottom, and then you'll see another round of popping. So don't get surprised if a bunch of naysayers on this site jumping in next spring because they run out of patience.

To come out ahead in the RE game, you need incredible patience, years of patience to wait for the bottom. Sellers who sell in a down market are usually people who have no other choices, so their reservation price is next to 0.

For East Bay, it already peaked around summer. Some Peninsula and West Valley properties are still rising, although most of them are flat or slightly down since October.

So don’t get surprised if a bunch of naysayers on this site jumping in next spring because they run out of patience.

I highly doubt anyone who has been following this bubble for so many years will jump at 10%. However, there may be some really good deals here and there when the foreclosures start to blossom like spring flowers....but I myself may wait another 5 years if I have to......it's all about the fundamental value.

So don’t get surprised if a bunch of naysayers on this site jumping in next spring because they run out of patience.

Well, if they lower prices pre-emptively to1997 level I may jump in even though median prices may be down only 10%. ;)

So don’t get surprised if a bunch of naysayers on this site jumping in next spring because they run out of patience.

Personally, I enjoy the challenge and excitement that comes from catching falling knives! Too bad I'm running out of fingers, though... :-(

"So don’t get surprised if a bunch of naysayers on this site jumping in next spring because they run out of patience."

Buying in the spring is probably not a good idea because many owners are waiting for a rebound to occur at that time. Two friends are waiting for spring to unload their RE investments precisely for that reason. I believe after this spring, we will see a much biigger drop.

Also, create ORKUT which is, AGAIN, a copy of Friendster.

Heh. Well, for about two months, it was actually usable. For more than a *year* now, you get server errors every few page loads. Doesn't get any better, ever.
Makes you wonder what these guys are doing with their time besides watching their stock options vest.

Anyone who thinks Google is some sort of innovator is like people buying houses as an investment - idiots.

In two words. F@CK GOOGLE. If this is the best thing to come out of SiVal in the last 5 years, god help us.

Indeed.

I recently did the tally. Of the top 5 people I'd prefer not to work with again, all but one now work at Google. And most of them for the same reason: very, very smart, very eloquent, very arrogant, very easily bored and very lazy.

John Batelle recently did a reading of his Google book at the Google campus in Mountain View. The one question he was asked most by all those young dudes was "What should Google do?". Sounds a bit aimless to me.

I hear that the Google cafeteria is just like the one in college, especially in the evening - the only ones over 30 are the janitors.
I keep thinking of Netscape ca. 1997. That company imploded because of rampant inexperience, rapid brain drain due to people "calling in rich", and of course pissing off the everyone and their brother with their arrogance, making them all very motivated to kill them.

If you have a minute, check out www.google.com/jobs and look at the photos that illustrate what it means to work at Google. Do any of these guys look like they're working? Let's see:
- the piano playing dude
- the roller hockey guys
- smiling mom in front of PC with baby on her lap (ever tried that? Doesn't work. Trust me on this one.)
- the folks checking out the good selection at the cafeteria (all slightly overweight. Hmm.)
- the dude chilling on a bean bag with headphones on
- oh wait, there's the lady who's actually staring into her PC screen. Smiling, though - there's probably something funny on.

IMHO, all the whiny young gazillionaires will hang in there until their last share has vested and/or the inevitable corporate reality check arrives.
Then the wacky geek fun dissipates, and poof, they're gone.

I pity the poor sobs who won't have made money by then and need to clean up the mess afterwards.

In case you're wondering, this is not investment advice. I know as much about Google than everybody else.

@SQT: I’m all for money going back into stocks too.

_smile_ From a totally disinterested perspective, of course.

@iceman: SUNW looks like a buy under $3.70

Hard to bet against the x86 monster at this point. If intel doesn't do it right, amd has shown that it will.

@GOOG Haters: Yeah, terrifically overpriced. All revenue comes from an easily replicated product (ads) that will eventually exist in an extraordinarily low margin and efficient market. Orkut is an embarrassment to software developers everywhere. Still, the maps are kinda cool, although yahoo now has a beta version of maps that is just as good/better.

@PeterP: Don't get cocky kid. _smile_

cheers,
prat

All revenue comes from an easily replicated product (ads) that will eventually exist in an extraordinarily low margin and efficient market.

Google also has these enterprise-level search products, but for the life of me I don't understand who has budgets for products like this:

"Small and medium business: Search up to 100,000 documents for just $2,995"
"Large Business: Search up to 15 million documents, starts at $30,000"

Does it really cost Google that much to run their search portal? I doubt it; huge margin there. I'm sure you can buy a search script for a fraction of those prices.

praetorian Says:
Still, the maps are kinda cool

Yeah, and if the past is any indication for the future, they'll be exactly this cool a year from now because the guys working on it are now bored, want to move on to an even cooler thing and there's no one who can tell them they can't.

Anyway, let's say Google makes all 5,000 of their people gazillionaires.
How much effect will that really have on real estate in the valley?
Will these guys really bid up a $hitbox in Campbell?
How much of the gazillions will trickle down into the local economy?