patrick.net

Stocks Tumble, Bond Yields Climb As Interest Rate Worries Linger
http://biz.yahoo.com/ap/060308/wall_street.html?.v=13

This news makes me happy ….

This is just the beginning.

Look, if we do not profit from the fall we will go down with the rest.

"I hate to repeat:

I earn 160K in Bay Area and have NO HOPE of owning a home …. "

Perhaps not in Hillsborough or Los Altos Hills. But "no hope"? Hardly - you have to admit that is somewhat of a hyperbole. You most certainly can afford A home, perhaps not a GREAT home or even a single family home, even at these insane prices. I know people who have bought in the last year who make considerably less than you.

I know people who have bought in the last year who make considerably less than you.

Scary, isn't it? The "28% - 33% gross" guideline was established with a reason.

At 33% of gross income, "ha ha" can afford a $4400 mortgage payment. There are PLENTY of places he could qualify for. Didn't he also say he has something like $150K in cash? If he is single with no dependents, he should have a hell of a lot more saved than that at that level of a salary. I only make $63K/year and have $120K in the bank.

I just wanted to thank everyone for their support. Today I have been clean and sober for 2 years! That's right, it's been 2years since I've set foot in a Home Depot! I haven't so much as touched a rubber pond liner or decorative pre-cast concrete block let alone the harder stuff like newel posts and pergraniteel! For me, it all started innocently enough w/re-runs of This Old House but that led to Hometime and by the time I found myself watching Flip this House, I knew I'd hit rock bottom. That's why I always carry this galvanized 10 penny nail with me. To remind me of just how low I'd sunk, and how far I've come. Thanks everyone.

At 33% of gross income, “ha ha” can afford a $4400 mortgage payment. There are PLENTY of places he could qualify for.

It is 4400 PITIH.

Assuming property tax at 7000/yr, HOA + Insurance at 5000/yr, 30yr FRM at 6.35%, 4400 will support a 550K mortgage. Even with 150K down, that is about 700K. Perhaps a condo or a small townhouse in an okay neighborhood?

To remind me of just how low I’d sunk, and how far I’ve come. Thanks everyone.

Give yourself some credit. ;)

"Assuming property tax at 7000/yr, HOA + Insurance at 5000/yr, 30yr FRM at 6.35%, 4400 will support a 550K mortgage. Even with 150K down, that is about 700K. Perhaps a condo or a small townhouse in an okay neighborhood?"

You guys need to get out more - Bay Area does not mean just Palo Alto, Mountain View, Cupertino. A $700K house, sans HOA, is possible and in a decent neighborhood in a lot of the East Bay. Sorry, I just have a problem with people trying to get sympathy where none is warranted - "ha ha" is most certainly doing better than most folks out there.

A $700K house, sans HOA, is possible and in a decent neighborhood in a lot of the East Bay.

Where? In Fremont, condos and townhouses are already in the high 600's.

It is not easy to find actual houses for 700K. Recently, many people spend more than half of their incomes on houses. It is unwise to fight with the kamizakes.

I only make $63K/year and have $120K in the bank.

Congrats. If you are able to live on less, you will be out of the rat race sooner. High salary is not necessarily a bless. Being salaried is the curse!

"Where? In Fremont, condos and townhouses are already in the high 600’s."

I just did an MLS (ebrdi.com) for Fremont. As of right now, ACTIVE listings:

5 under $300K (all 1 bedroom condos obviously)
65 $300K-$399K
45 $400K-$499K
54 $500K-$599K, 28 of which are detached
72 $600K-$699K, 59 of which are detached

Again, get out of Silicon Valley central and it IS a little bit better...

Funny, they do not turn up in my searches.

So there is not one property under $700K in Fremont when you search ? What do you use to search?

So there is not one property under $700K in Fremont when you search ? What do you use to search?

ZipRealty. Perhaps I should adjust some parameters.

Search at realtor.com - they're there.

Fremont? Oh my. I think I would rather move to the Midwest.

As a fan of modern and contempory architecture, I was pleased with what I saw.

I love pre-fab. I have to repeat, it is not a mobile home.

I am a big, big fan of high density, wisely and beautifully designed urban infill. Bring it on!

Same here. But I am also a fan or rural, self-sufficient houses.

I've got an Idea...

1500 sq. ft house on 5000 square ft. of land = $1,000,000 in Bay Area.

Cool.

But let's try some new world math:

Let's divide that by ten and see what we can cook up for affordability:

1500/10 house = 150 sq. ft. dog house
5000/10 land = 500 sq. ft plot
1,000,000/10 price tag = $100,000 affordable price

Sweet!

What I'm going to do is start selling 150 sq ft. dog houses on 500 sq. ft of land for $100,000 in the Bay Area.

Trust me, it'll be worth it to live like a dog because:

1. It's the Bay Area and the best weather, restaurants, schools in the
world.

2. Real estate ALWAYS goes up. So in a few years you could actually
sell the dog house and move to Austin Texas and buy a mansion.

This metro-puppy lifestyle sounds like a viable option. I think I'll sell the rights to "Dog House Flipper" the TV show, on how I got rich flippin' burgers by day and flippin' dog houses by night.

I thank the Baby Boomers for creating the economic conditions that lead to my success.

Like the old Chinese proverb says: "Wei Chi." Where there is danger, there is also opportunity...

Ha, ha! I'm gonna be rich!

Soon I'll be pimin' it!

Wah Wah said:
"I hate to repeat:

I earn 160K in Bay Area and have NO HOPE of owning a home …. "

The ellipsis suggests that you want us to complete the sentence so here goes:

"... that is worthy of someone of my status and allows me to look down upon the minions of the land."

Just spoke w/ a friend (mort. bkr.) and by his estimates 50-60% of all homes in the U.S have zero equity. At this point it doesn't much matter if that was the result of "Zero Down", 125% financing, bought at the market peak or whatever. There is NO ROOM for a realt-whore in this picture! His sentiment was that over half of the home debtors are extremely vulnerable as the yield curve works itself out. Not cool.

John F,

"that is worthy of someone of my status"

Why did it take so long for someone to say that?

Thank you, although I’m starting to wonder why this bird flu seems to be evolving to a mammal transmisible virus at this point…

Shit happens.

Which is why we infectious disease types ALWAYS wash our hands.

I know.

Half the things you’ll catch out there are fecal-oral.

I used to be very careful. But then germs are everywhere anyway. I do not care as much anymore. The single most important factor in life is fate anyway.

SF Dean,

"overall economy tanking as a result?"

Will there be pain? Sure, but I tend to take the view that it will most directly impact those that are reliant on RE for their livlihood. Mort. brkrs. are already feeling the pain. The "re-fi" craze evaporated last Labor Day and with the on going fight to open up the MLS (banzai) there is bound to be pressure on realtors comp. as well. A true abberation was our own Monaco Coach right here in Coburg, OR. After 9/11 people thought twice about flying and "high end" RV's sold well. Their best years ever! That's going to dry up also. Most of the down payments were done w/ cash out re-fi's.

You can live in your vehicle but you cannot drive your house!

http://www.autoblog.com/2006/01/05/gmc-pad-wins-california-design-challenge/

All prices have to do is level off for things to get REALLY ugly.

Exactly. Also, once the expectation changes, high price-rent ratio can no longer be justified.

DinoOR (and others),

A newbie question. What is the real problem of having zero equity in one's home IF (a big IF) the home owner is not forced to sell or refinance ? Actually, the questions I have is - If I buy a house of 1M with 200K down, and the value drops to 700K in 2 years, the loan amount of 800K exceeds the value of the house. Can the bank demand more equity to be given to them in such a scenario ?

My particular example may be wrong. But I am trying to understand the "equity cushion" term. Is it only a risk that becomes real when I am forced to sell, or is it a risk because the loan is "callable" by bank ?

Ewwwwwwwwwwww. Excuse me while I go wash my hands………..

Don't worry. Germs are everywhere. What doesn't kill you makes you stronger.

But alas, there is also chance.

Fate has more influence than chance. Sometimes, it is just not possible to collect that $200. ;)

My cats will be angry when they have to stay inside if/when bird flu gets here.

Mine are always inside. It is too dangerous to let them out.

Bird flu will get here. But there have not been major human outbreaks anywhere.

It could certainly cause problems when the time comes to refinance though, and the bank is no longer willing to advance you the amount you still owe. You are responsible for the difference!

Yes, and consider that an estimated 82% of CA mortgages last year were IO or neg-ams with a national average of 2% down payment, plus the fact that most CA homedebtors are already stretched to their limits even BEFORE they've reached the end of the fixed/teaser interest rate period. Most of these buyers simply will NOT be able to cover their monthly payments when they adjust to ARMs, much less when they convert to fully amortizing mortgages.

These people will either HAVE to refinance or sell the house. Which, of course, they won't be able to do, beacause they will be NEOs (negative equity owners).

Many people refinance just to pay their mortgages. These people will be screwed.

NEOs will want to think that the reality is all fake. :)

RANDY, what is your email address? I have some questions for you. Thanks.

randolfe_@hotmail.com

You can also reach me from randolfe.typepad.com

ToBA or not toBA,

tsusiat stole my thunder BUT there are other repercussions that may be more "indirect". While you may be current on your obligations (that doesn't mean that your NEO neighbors are)! Everyone has their threshold of pain. For many Americans it is zero. Particularly if the whole idea was to make a huge killing in a short time.

Many people refinance just to pay their mortgages. These people will be screwed.

I know a guy like this. He's a pretty good friend actually. It's very sad. He was in very good shape at one point, but a career bump and nasty divorce later, now he's sitting on a McMansion which he should have sold to finance the divorce. He's a real finance quant too, so he should know better; no excuse. He's probably solvent up to a 20-25% correction in prices, but after that he's upside down bad. Even with flat prices, he's still digging a hole. Just goes to show it requires more than intelligence. You have to have some common sense too.

Peter P,

GM's "PAD" looked pretty cool! Now all it needs is graffiti proof paint. Back in the 70's my brother worked with a guy in NW Portland that lived in his RV during the week just parking it on the street. On the weekend he took it to his cabin towards Mt. Hood. Then again he was single. It certainly didn't have the appointments of the "PAD".

Floor traders go extinct, Realtors(TM) go extinct, mortgage brokers are pared back. .. I guess we will always need undertakers.

There are still bond floor traders even though much of the trading is now done on eCBOT. S&P floor is still alive after the E-mini practically took over.

SF Woman,

The "Big Board" was forced to update technology or go extinct. They were losing volume every year.