patrick.net

@nancy, the lowest any company pays in the BA is 1HaHa, aka, 150K. Everyone at every company here gets stock options, you actually use your pets.com stock as legal tender at 120 establishments in Santa Clara. The average janitor at a BA company makes 1.7 million a year, plus countless stock options.

Nancy,

The median household income is usually an ESTIMATE, not a hard data directly fed from IRS database. Also, it is a median number, not mean. Usually it is a product of the data obtained from the US Census Bureau, State's financial management office and the city's research group. It is mainly a derivation from a financial model that they developed and fine-tuned over time. Contrary to common belief, such data comes from SURVEY data, sampling method and respondents' integrity in answering questions may skew the final result.

As for incorporation of stock options, it is INCLUDED in the estimate (at least I saw it mentioned in the footnote).

Is the current median household income data truely reflective of the reality? I think it is as close as it gets, because they do cross check data with different sources.

Cheerful and wowwow...,

Congratulations for making money in the RE, and good luck in the future.

Do you have any suggestions / thoughts to make money investing in this economy / market from this point onwards ? Past performance is no guarantee of future results.

If you have any ideas other than buying more RE in Idaho, please share with us.

Damn, I'm out for a few hours and the fireworks really go off around here.

@SFWoman,

OK guys, since I am somewhat new to blogs (this is my first)- how often do Realtors or other people with a vested interest in maintaining very high real estate prices come to this blog and simply pretend to be real estate purchasers who are doing well or who have hit it big? Do they ever get groups to do this? Does Patrick ever produce a list of visitors to this site (I believe I saw one on Athena’s Sonoma blog)?

I don't think anyone here produces such lists. Athena a different blogging service (blogger I think); this site uses WorldPress which doesn't easily (so I can see) allow what you propose. I use Typepad on my own blog and it doesn't really support this user visits either, but does have a list of who the last few visitors were.

I'm sure this blog has had at least a couple of colluding spinners, but nothing well coordinated.

Coordinated blog attacks aren't all that common, but becoming more so over time. Mainly in political arenas, there are organized blogs which exist for the sole purpose of getting a bunch of partisans to all go pile on some influential other blog and skew the sentiment. Also, a bit more troubling, there are at least two startups I know of which have developed pretty impressive natural-language processing/artificial intelligence processes which can auto-blog but appear very much like real people. You can only tell they aren't real in that they appear for a short while, only respond to the thread comments a couple times -- usually only briefly engaging other comments (which are usually also collusive "bots") -- then disappearing. One of these guys is working on actually creating persistent, long-lived virtual blog personalities.

In fact, maybe I am not real, just an advanced bot. Oh wait, I passed the Turing test because I've made far too many idiotic comments that can only be attributed to being human.

Wowwow... ,

Pleasanton is a good area, the commute is bad to South Bay, and OK with BART to SF. In general, the area feels very much new, and clean compared to San Jose.

But ... I don't think there are any houses in the range of $300-350/sqft there at all. That is simply way off. The "asking" price is in the range of $400-450/sqft. The $300 rate was in 2003.

Pleasanton inventory is steadily climbing this year. It's not the core of BA, so will fall first.

@SGV Patience,

Speaking for myself (Sans degree at the moment) I believe in my own social mobility as long as I need only care for myself. 27, no kids, no significant debt $20,000 in an investment garnering me 5% a month compounding interest that I can contribute to on the fly. I wonder what you might do in a similar position?

I think you already know the answer. Invest in your own education and work experience so that you can rely upon your ability to earn an income. Then, once you know you can live life comfortably, react to unseen changes, and deal with unplanned events, invest wisely. I don't give specific investment advice -- not because I don't have an opinion, but because others here are far more capable at doing so than I -- I just try to focus on big picture stuff and how it is important to you.

Just make sure your investment is diversified according to your own risk tolerance level. At your age, this should be aggressive and long-term. And, don't invest a penny until you've maxed out every possible tax-deferral available to you.

Just my own perspective. I wouldn't really consider buying a home -- even if there were no bubble -- if I were in your shoes. It's probably worth far more to you to stay flexible. Consider it the price of a real-option. If you can move relatively quickly whether for job, for love, for family, you will probably be far better off than trying to be shrewd by buying a home anytime soon. Once you're tied down, rooted, or perhaps just happy being single and in one place for a longer while, then buying might make sense.

@Cheerful,

Thanks for posting the details of your experience, and as others have said, please continue to post. You won't be labeled a Troll by most of us unless you purposefully incite things without being willing to engage in serious debate. Surfer-X has had a very long, bitter battle with genuine Trolls here for years, so his response is easy to understand. See how your post did bring out another much more "Trollish" response from another commenter.

Anyway, as to evaluating your situation, all I can say is that ultimately all real-estate transactions are LOCAL. We talk a lot about averages and trends, but it is always possible to find exceptional deals in any market -- just harder in some than others. This is really what the professionals like Zephyr or FormerAptBroker here do well. They have the experience, intuition, and stomach to run profitable RE investment/income businesses.

What you did was speculate (again, in my opinion), and got lucky. If you take your luck as such and use your gains to invest in learning how to run a RE rental business, then you stand a chance of doing well. If you think your luck was something else, more directly due to your own incredible prowess, then I'm afraid I'm not very optimistic about your future ability to generate returns. And, by the way, X is right that you have not *realized* some of the gains you are claiming. With RE, your gains are not realized until sale or asset restructuring occurs -- until then it's all book value. We don't do fair-price valuation on RE for tax or financial accounting in the US. So unless you're pulling out equity and restructuring the asset, it's still only worth the book value to you now (because you can't tell the future. it could drop to what you paid the day before you sell it).

Remember this, for a RE income business, or any business for that fact, the value to you is ONLY based on the expectation of future FREE-CASH-FLOWS. This means cash in excess of all capital budgeting needs, operational needs, and working capital. What you have described doesn't give me enough info to evaluate whether you're doing this or not.

New thread: "GSEs too Socialistic for Red China"

If you think your luck was something else, more directly due to your own incredible prowess, then I’m afraid I’m not very optimistic about your future ability to generate returns

Another truly excellent post, Randy H.

SFWoman
I think you've got it right. Trolls working together for their own benefit...like con men passing the mark's wallet...

just to flog a dead thread... on the 10x rule, interestingly, there's a 'licensed boarding house' nearby on the market i was looking at, don't ask why – to do with one of my partner's hare-brained business schemes.

the owners paid $657K for it 2 years ago (bought at the top of the market), have been making a loss on it ever since, prices have dropped, and it's back on the market for '$640K negotiable'. Even at that price, they have lost 17K + the stamp duty and conveyancing costs, so maybe another $20K. Plus the money they've lost every week in the repayment shortfall.

When you calculate the actual annual rent gathered on it (assuming fully occupied) and multiply by 10, you get $426K. $640K asking is almost exactly 50% over the realistic rule of thumb for a sensible investment (to realistically be able to pay back interest and principal, and not be praying for capital gains to bail you out). Interestingly, a recent OECD report stated that Australian property was 50% overpriced on 'fundamentals'. Uncanny.

Just want to note that Cheerful was in all likelihood quite confident that when his 1.2 haha stock market investment still existed, it was as good as "hahas in the bank" until it wasn't. If Cheerful could have predicted that crash, he would have 1.2 hahas plus interest more than he does now.

Unless Cheerful's predictive abilities in terms of housing futures vis a vis stock market futures are dramatically superior, equivalent risk exists today.

As pointed out by X and Randy, your hahas are not in the bank until they are.