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Beating a Dead Horse


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2006 Feb 21, 9:42am   21,827 views  102 comments

by SQT15   ➕follow (0)   💰tip   ignore  

It's pretty clear most of us believe there is a bubble. It's also pretty clear that many believe the peak is behind us and we're now in the midst of what may be a very large, very drawn out decline.

So now what? Is there anything left to debate? Or are we all coming here out of habit?

And why are there still people out there who claim there is no bubble or decline? What's that all about?

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82   surfer-x   2006 Feb 22, 3:44am  

is less than 70K? Could you put your considerable talent to use for me and examine why the state and federal goverments would publish numbers so vastly different from yours? I mean when I drive through the BA all the trash on the freeway not withstanding, to me it just looks like everyone is walking with tons of bling and driving low riding Escalades due to all the gold in the back.

83   Peter P   2006 Feb 22, 4:05am  

“I am saying this based on a very narrow sample - my social circle - mostly Asian immigrants. Based on this sample, I think there is more to BA bubble than double income families with more than 200K income.”

Then why have there been more housing bubbles - and busts - in Asia?

Hong Kong, Japan, you name it.

In front of greed, there is no such thing as national origin.

84   Peter P   2006 Feb 22, 4:05am  

Dr.Strangelove, in that case greed is more universal than I thought.

85   HARM   2006 Feb 22, 4:05am  

@Dr.Strangelove,

At least the chimps don't have to keep paying interest on the bananas after they're gone. ;-)

86   Peter P   2006 Feb 22, 4:06am  

that its too irresistible to not come here every hour and read some posts.

Every hour? My F5 (Refresh) key needs replacement soon. ;)

87   Peter P   2006 Feb 22, 4:09am  

You are right that 1M is affordable for $300K/year income. The question is whether that is wise? With that high an income, by saving and investing prudently, one can expect to get rid of the leash on one’s neck a lot sooner than others.

H.Z., Face Reality was claiming that a 300K couple can easily afford a 1.75M mortgage!

88   Peter P   2006 Feb 22, 4:13am  

One observation is that people recognize the appeal of real estates but they fail to understand that the market have discounted information long ago.

89   Peter P   2006 Feb 22, 4:14am  

I’d much rather replace my F5 key than have dried, cracked hands from using paint thinner to clean them of the spray paint from PRICE REDUCED signs!

LOL :lol:

90   HARM   2006 Feb 22, 4:40am  

Hey, DinOR,

Have you noticed all the PRICE REDUCED signs around lately? No particular reason, Just curious... ;-)

91   Peter P   2006 Feb 22, 5:09am  

But if one has enough vanity to move into a rich neighborhood stretched thin, the kids may not have that great a time

You have misunderestimated Face Reality. I bet he really meant that shitboxes in crappy neigborhoods will be priced at 1M - 1.75M because these high-income people have no choice. After all, they rather pay 7K mortgage than 1200 rent because they WANT to buy.

92   HARM   2006 Feb 22, 5:12am  

I was inspired by the cultural/emotional subtext of the posts here. New thread:

The Psychology of “Ownership”

93   Peter P   2006 Feb 22, 5:51am  

Let's ask this question: how much premium over renting would you pay in order to own?

94   Peter P   2006 Feb 22, 6:12am  

I know that from a financial standpoint, my family is not alone - there are others like this. Unless there is some catastrophic event that clearly causes prices to fall, it is very difficult to convince these folks that it is not a good time to trade-up.

Trading up is not necessarily a bad thing now, because of extreme price compression. The key is whether one can afford the new house conservatively.

95   HARM   2006 Feb 22, 6:19am  

I am beginning to feel that a crash may not exactly be imminent because these fools will rush in to support a gradually declining market until things pick up again.

PS, let's look at it this way: If there are enough cash-rich "greater fools" out there to indefinitely support current housing prices, then there's really no bubble. By definition, prices would be reflecting fundamental demand, not irrational exuberance/easy credit.

OTH, there are usually a few "dead cat" bounces on the way down after an asset peak has been reached. This is to be expected, and in now way should be misconstrued as a "buying opportunity". At least not until fundamental price support levels have been reached.

96   Peter P   2006 Feb 22, 6:19am  

I am beginning to feel that a crash may not exactly be imminent because these fools will rush in to support a gradually declining market until things pick up again.

I believe the lower-end is feeling the chill from rising interest rate, especially on the subprime side.

The Silly Valley is full of silly people who think they are smart, we will see.

97   Peter P   2006 Feb 22, 6:55am  

PS, I understand and agree with you.

98   OO   2006 Feb 22, 8:10am  

PS,

same boat here. I am eyeing some really nice acreage properties, and I am sure they will fall much harder than my place. Save up more money in the meantime, and upgrade, debt free in 5 years. In fact, ALL the acreage stuff I am targeting have already gone through one round of reduction with no takers, some reduced by 10-15%.

The higher end will fall real hard if we don't upgrade. When the market falls, at least I can rely on some cash-rich first time buyers to take over my place, these high end places have far fewer people in the line waiting.

99   Michael Holliday   2006 Feb 22, 8:30am  

SFWoman Says:

"I see people in the city doing this all the time. They make $250,000-$500,000 a year..."

I can't friggen' believe those salaries. Simply unimaginable to me.

Even a $125,000k salary seems beyond my dreams.

Just amazing.

Must be doctors or high-paid lawyers.

Maybe it's just that I'm so used to making sh-t...

100   Peter P   2006 Feb 22, 11:21am  

Even Larry Ellison seems to have Bill Gates envy (and his accountant wants him on a budget!).

Poor him. He is not buying a private Mars colony with Option ARM, is he?

101   FormerAptBroker   2006 Feb 22, 2:59pm  

DeoVindice Says:

"I’ve come to one conclusion. I’m just going to focus on making a lot of money. Seriously, if there is one lesson of “Rich Dad, Poor Dad”, it’s that being wealthy is a decision."

When I was in High School one of my first bosses told me that you need to "be your own boss if you want to make a lot of money" but it wasn't until years later when I heard rapper Ice Cube say "in life you are either a pimp or a whore" that it became clear that most people working for a boss are not much different than a whores working for a pimp...

102   FormerAptBroker   2006 Feb 22, 3:54pm  

Owneroccupier Says:

"I am not saying people are not making that kind of salary, I have plenty of friends with 250K+ household income, but they are all people armed with ivy league degrees, JD/MBA, 5-8 years of working experience"

Then SFWoman Says:

“I see people in the city doing this all the time. They make $250,000-$500,000 a year…”

Most people tend to socialize with those who have a similar education and income level. As an apartment owner I talk to a wide variety of people from tenants to vendors on a regular basis. It is always interesting to come home to San Francisco and hear a friend's wife (who's idea of a wide variety of people is the mom's in both the KDB and Town School PTAs) talk about buying three pair of $500 shoes when I just made a deal with a hard working new tenant to pay his $500 security deposit over five months. A while back a friend (that makes about $250K a year) commented on an article that said less than 1% of American "households" (not individuals) have an annual income of over $225K. He said that is sad that even though he is in the "top 1%" he would not be able to live in SF and send his kids to private school without help from his parents...

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