patrick.net

However, if you go to a lender (a mortgage company, for example) and give him $10,000 (10% down on a 15-year note), he gives you $100,000 which you can use to purchase a home. Now you have something that you can improve the value of, by rennovating or remodelling, and resell for a profit. You are in control.

ScottC, you are living in another time......... the neighbors dog fido wouldn't give up his doghouse for $100k. You seem to completely ignore the fact that we are at the very beginning of a serious down cycle in housing! Buying right now is like buying stock at the peak before the crash! Your advice will be good in a few years, but not right now.

And really this is the thing. It’s all about money, whether you work for money or whether money works for you. You’re either on the outside track, the rat race, or the inside track, the ownership circle. You’re either running around, working for money and accumulating expenses, building no wealth, or you’re sitting back, making money work for you and gathering revenues, building wealth, building an estate, a real estate. In other words, you’re either paying for someone else to retain ownership or you are retaining ownership.

Another pep talk....you seem to be good at this....and you should be....your a realtor. ;) "Now is the time to buy".

Renting only makes sense in the short term, as a temporary strategy to reduce living expenses until you can save the capital to invest in ownership.

The only reason I am renting is because I know the big sale is coming soon! You can buy a plasma TV at best buy and if it goes on sale a few weeks later, they will credit you with the difference......with housing the difference is huge and you get no such credit....It's not fun watching that better house on the better side of town sell for tens of thousands less than you paid for your shitbox.

BTW, Scott....I have one question for you......Is it always a good time to buy?

ScottC lives in Texas and therefore probably doesn’t quite understand how wacked out the markets are in California and the East Coast.

Yes the coasts are worse,...but someone mentioned they live in Texas and there is a bubble there too. As far as I know, there is a bubble across the majority of the US....there are areas that are less bubbly in the middle, and in those areas the decline would be very moderate, but there will be some decline. Along the coasts, we're talking major bubble! ...and I'm sure all realtors including ScottC know that better than most of us.....Real estate is their business and it is their job to research this stuff.

Realtors saying not to worry as sales always slow down during the holiday season.

Realtors know it always goes up....even while it is going down!

Affordability is THAT low here and renting IS a bargain.

Right--you can rent the same home here for about 1/3 of your monthly fixed mortgage.
Who really wants to pay $900K for a small, old beater home?
As long as that's the case--there's no reason to buy.

I want to correct a major misconception noted above. Real estate is in no way analogous to stocks, so the dot.com bubble is in now way analogous to the current real estate bubble in certain markets. It is simply a false analogy that reflects nothing but a profound misunderstanding of real estate.

It is the psycology of the stock bubble that is analogous to real estate. What is worse about real estate is that while it is falling, you can't instantly sell it like stock unless you were to (absolute) auction it. In previous crashes the runup was no way near what we are seeing now because there was no funny money in the picture............so the psycology of it falling wasn't anywhere near what we will have this time. Noone wants to be underwater by $100k or more and in this RE environment, this situation is not unlikely......because of this, I believe the fall in prices will be much more quicker than any other time in history as many rush to the exit door like a stampede. Give non-creditworthy buyers access to hundreds of thousands of dollars and you have a serious crash in the making. Hell, I could have jumped in and got a decent house for $1M, but when the liquidity disappears, I would be bankrupt with all the rest of the suckers who drank from AG's fountain of money.

“And her husband is such a financial genius— he just got his mortgage brokers license.”

I sure hope he didn't quit his day job. :)

Imagine selling the same poison that makes yourself ill.

"They’ve already taken 2 second mortgages out on their home, for necessities like a boat, and surprise surprise, they’re feeling financially squeezed. "

Wow....see, now THIS is the thing that gets me. Geez Louise, does anyone get it? And silly me, I'm doing quite well living below my means but I am always looking to cut fat. Just yesterday I called Verizon to analyze my contract for possible cost savings. I LIKE to live without stress. Some folks seem to feed on it. But, hey, I guess I'm just goofy like that. LOL!

Kurt...so sorry about the news. Was there myself several years back...but wound up in a better place, being trained for a better job, was wooed back to the old job by former boss and was able to write my own ticket. As the saying goes (paraphrasing)....often when one door closes, another one opens. Good luck to you. :-D

BayQT~

necessities like a boat

Well..if it's a house boat, it could become a necessity after they lose their house.

Apparently not. They’ve already taken 2 second mortgages out on their home, for necessities like a boat, and surprise surprise, they’re feeling financially squeezed.

And her husband is such a financial genius— he just got his mortgage brokers license.

When someone is so convinced of the housing game, let him live in his dream :)

... for a while. His alarm clock will get him.

Realtors know it always goes up….even while it is going down!

Real estate never goes down --it just appreciates in a different direction.

Newsfreak --loved the "Don't be jealous" poem!

square feet in square miles.

try typing "100000 square feet in square miles" into google. Or follow this link: http://www.google.com/search?q=100000%20square%20feet%20in%20square%20miles

Try "9.54 dkk per liter in dollars per gallon". It's a pretty featureful tool.

I still say google is way undervalued. This is not an example of why, but I couldn't let it go unsaid. : )

I am wondering what do you guys thinking about buying a manufactured homes? it is in between renting and buying. dont you agree?

MeACuLpA, Actually my wife and I investigated this as a possibility ourselves a couple of years ago (when prices were already escalating beyond the reach of mere mortals & sane financing). We went to one of the biggest and (IMO) best quality manufacturers in Corona (about 40 miles SE of downtown LA).

Well, here's the deal... a *whole lot* of other Californians had gotten the exact same idea and were bidding the price up on these things as well (sound familiar?). Even so, the price of a comparable new 2-3BDM manufactured house was still significantly lower than a regular house.--around $100-150K at the time, as I recall.

However --and this was the kicker-- the cost of raw land to build on was the same as for any other type of home. When you buy residentially zoned land, you are in competition with every other homebuilder out there, and must pay the seller the current (inflated) market value. You must also pay city/county permits, inspection, easement & other fees (often 10s of $thousands) and thousands more to have water, sewage, electricity, grading, foundation, phone service, etc. extended to your property. Sometimes, depending upon how far out of town you are, this can cost more than the house itself.

If you "buy" a manufactured home in town in one of those planned communities, then permits/easements/utilities are not an issue, but you will also pay a very high premiuim for that. As in, "close to conventional home price" premium. Also keep in mind that (in CA at least) you will NOT own the land the house sits on --you will be renting the property in addition to paying a loan for the manufactured home, usually on a 99-year lease. So this way you get the worst of both worlds: paying too much for a bubble-inflated depreciating shell, while enjoying few of the benefits of true home ownership: title to the land, tax deduction, ease of selling (who wants to "buy" a home so they can pay rent?), etc.

I'd think again before taking that plunge. Personally, I'm happy to rent until valuations once again reflect true economic fundamentals, like rents and incomes. Then I'll buy a regular home WITH the land it sits on.

Cindy,
The "Glidehouse" looks interesting, and definitely an idea whose time is due; there's so many possible departures from the average "tract home". However, I'm sure that particular design is over $200/sqft installed, not including land costs, which could easily put the home close to $1M anywhere near SF Bay area--does that sound right?
If land costs drop, it could be an interesting possibility someday.

"However, I’m sure that particular design is over $200/sqft installed, not including land costs, which could easily put the home close to $1M anywhere near SF Bay area–does that sound right?"

KurtS,

See my comments above. I did my research, crunched the numbers and came to the exact same conclusion. The biggest component by far of housing prices in CA is the land. I have nothing against manufactured houses per se, in fact I agree with Cindy that they're often better built than conventional ones. But anyone who thinks they can save a bundle going this route (in CA anyway) is kidding themselves.

Damn. We missed out on free butterfish sushi… if only MarinaPrime would take the bet.

There's nothing like eating butterfish sushi at a trolls expense during a resession.

There’s nothing like eating butterfish sushi at a trolls expense during a resession.

Now I worry that good sushi restaurants may close during the next recession. :(

I think good restaurants truly deserve Fed bailout packages.

maybe in areas where land is cheap they might be a viable option?

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".

ScottC:
"You’re either on the outside track, the rat race, or the inside track, the ownership circle."

Robert DeNiro (in Meet the Parents):
Greg, with the knowledge you've been given, you are now on the inside of what I like to call... the Byrnes family 'circle of trust'. I keep nothing from you, you keep nothing from me... and round and round we go."

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.