patrick.net

Crazy , I pay $60 per month to propertyradar and should know better than zillow's crappy data. The inventory is not coming up around here.

corntrollio says

Even so, the tech bubble this time around doesn't seem as democratic as last time. Rank and file employees had far more stock last time around, and the shares are far more concentrated in founders, VCs, and limited key personnel this time around. It's not everyone and their cousin this time; it's more like everyone's cousin who happens to be a key SVP. Even for something like Facebook, a lot of the rank and file people got decent down payments, but they aren't driving these all-cash transactions

Where did you get this type of information? Reliable?

Inventory is scary low and prices are sky rocketing again just like last year. If I was a buyer I would give up and rent a 1 bedroom apartment in San Jose for 1800 per month

The beginning of a new ice age:

http://www.wikihow.com/Make-a-Glass-of-Ice-Water

Or move someplace where inventory and prices are more reasonable.

hanera says

Where did you get this type of information? Reliable?

Read S-1s and other SEC filings and also read articles on this. You can see how tightly concentrated share ownership is in a select few. The difference between the shitty businesses that had IPOs in the 1999-2000 range is that the businesses were shitty, had no revenue/profit, and the founders gave up a lot more of their stock. Working for these shit businesses was way more risky than working for, say, Facebook in 2010.

The companies that have been IPOing lately have had a more identifiable revenue model, and the founders and key employees haven't had to give up nearly as much stock.

More important is the companies that haven't been undergoing IPOs because they sold privately. In those cases, the founders and key employees retain an even bigger share of the pot and the VCs retain most of the remainder. Rank and file get enough to get them not to leave their job, but it's not a whole lot unless you were really early.

WOW! The UNtrustworthy are certainly in control of what information is apparent to the people!

Say hey! This was in the Wall Street Journal on March 30, 1999. Note "... how much it will buy."

Holy cow/interesting/compelling ...!

And where is it up to date??? Right here ... see the first chart shown in this thread.
Recent Dow day is Wednesday, March 5, 2014 __ Level is 104.4

WOW! It is hideous that this is hidden! Is there any such "Homes, Inflation Adjusted"? Yes! This was in the New York Times on August 27, 2006:

And up to date (by me) is here:
http://patrick.net/?p=1219038&c=999083#comment-999083

WOW! The UNtrustworthy are certainly in control of what information is apparent to the people!

And http://patrick.net/?p=1230886

dodgerfanjohn says

What's subject to debate is whether or not humans are inducing changes beyond what would normally occur.

No that's not actually being debated by the scientific community. That's a lie told by assholes who have a vested financial interest in polluting the world. They make a few bucks and the rest of us are impoverished as a result. They are thieves and murderers. Yes, murderers, because it turns out that pollution can and does kill millions of people a year. It causes cancer and a myriad of other diseases.

The bottom line is that pollution shortens life spans and inflicts a momentary cost on the entire world. Allowing polluters to make money at our expense is no different than condoning theft.

- There is no doubt that the Earth is warming as a whole.
- There is no doubt that the Earth's climate is becoming more extreme including extremes of summer and winter.
- There is no doubt that these changes are due entirely to man's influence.
- There is no doubt that these changes will have major negative impacts on economies and people's lives and lifespans.
- There is no doubt that the people denying any of the above facts are either liars with a criminal agenda or idiots who obey those liars because the idiots think their political and social agendas will be served by those liars.

At this point in history, any man-made climate change denier should be regarded in the same venue as holocaust deniers, Flat Earthers, and people who think they are Napoleon. They should be ridiculed as the village idiots they are, lest they gather a horde of idiots who vote mankind out of existence with bad environmental policies.

There are two major litmus tests that nature puts all sentient, technology producing lifeforms through. One is whether or not they annihilate themselves with nuclear weapons. The other is whether they annihilate themselves with global ecological collapse. The first requires fear or hate. The second only requires apathy, something we humans are damn good at.

Our galaxy is 13.2 billion years old and a mere 100,000 light years in diameter. It is composed of 300 to 400 billion stars. A space faring race from one end of the galaxy could easily populate the entire galaxy in 1 million years with transportation at a mere 10% of the speed of light and would do so because of economic pressures and the need for resources continually driving populations from more dense areas to less dense ones. So why wasn't Earth colonized by aliens long before the dinosaurs, long before multicellular life? Those litmus tests can be a real bitch.

Before the crash, we had a cousin here in Bay Area who was normally sweet and intellectual, then she became a Century 21 real estate agent. She got into an irrational argument with my husband about buying now ( this was right before the peak) or being priced out for all time. She even claimed we were harming our children's future. They didn't talk for awhile, which made me sad because I liked his cousin, and we used to go to the opera together. Years later, after the crash, she let her license go and started working for something called (I may be wrong about the exact name) the Housing Authority, which turned out to be slightly corrupt, but she joined up to help poor families own homes. She never apologized to my husband, never admitted the Patrick articles he sent her ALL ended up being true. Just years later she invited us to an art showing, and we said nothing about the argument again. She sold her home in Santa Clara last summer and moved out of the area. She spoke to us about real estate for the first time since leaving the fold during the sale of her home that had been in the family for two generations. She pointed out that Santa Clara had lost its charm. She pointed out the traffic along the Alameda, and the hooka lounge around the corner where a family owned cafe once was. She knew she was never going to be able to sell at these crazy inflated prices again, and got out of the Bay Area. She now lives in a lovely community with all the extra cash from our inflated market. She got out of the cult, and out of the Bay of Feudalism. I hope my cousin in Santa Clarita can at least shake the crazy cult like jargon of the real estate world, like my husband's cousin finally did.

hrhjuliet says

She knew she was never going to be able to sell at these crazy inflated prices again, and got out of the Bay Area.

Hmmm...with sales volume this low, how are Realtors making their living?

jojo says

Yes, the increased variability (volatility) of weather systems is a strong indication of Climate Change.

Who said it did increase?

jojo says

Straw Man says

jojo says

Yes, the increased [b]variability (volatility) of weather systems[/b] is a strong indication of Climate Change.

Who said it did increase?

http://en.wikipedia.org/wiki/Retreat_of_glaciers_since_1850

This is "weather"? Steady change in one direction is "volatility"? A-ok.

Even an earth with barely breathable atmosphere and a completely destroyed ecology would be far easier to live on than any other place in our solar system. Mankind would go underground and live in silos, mining the earth below for minerals and fuels to sustain life inside. Think bioDome underground.
We won't die out because of global warming, but it's VERY likely to cause a population crash. Those of you who believe Earth has too many people would approve, I guess.

corntrollio says

Also, local governments tend to snag massive fees, so even new housing is more expensive than it should be. I believe the estimate for one of the massive condo buildings in SF was $140K/unit. That's a hell of a lot of money.

This is correct. It calls “impact fee”. It is a single most important addition to local high cost of housing. Where this money goes is another question. Teachers salary schedule are unchanged from last 5-6 years.

Every time I think that housing can't get more expensive here in silicon valley, I turn out to be wrong. I bought a small house in Mountain View last summer, and similar houses, in worse shape, are going for ~15% more right now. A small 1000sqft 3/2 on a 6000 sq ft lot just sold for $1.2M in my neighborhood.

Inventory is low on the peninsula, almost non-existent if the school district is average or better. Open houses are flooded with interested buyers. The 3/2 I mentioned above was packed, and at one point, a tour bus showed up with a bunch of asian investors and a translator tour guide.

What is driving this? Is this all due to local wealth? The bus of investors would seem to imply that foreigners are buying here too. How much does loose Fed policy contribute in an area of such high demand and tight supply?

These kinds of prices require dual high income families to afford. Where do all the average income earners live? Is everyone commuting in from Gilroy and Tracy? It's hard to imagine how this could be sustained.

myob says

These kinds of prices require dual high income families to afford. Where do all the average income earners live?

1% of the population earn more than $400K and is loaded with cash.
$1.2M is like nothing to them.

That's not 300,000 people, that's 3,000,000 people.

If even 50% decide to live here, it can obviously be sustained.

If you're just an engineer or poor entrepreneur, you shouldn't even try to live here.

Go live in Tracy or Modesto.

Heraclitusstudent says

Go live in Tracy or Modesto.

I hear Ben Lomond is nice...

Bump. Down jojo, down. Sit. Good boy.

Lol@ "I posted more words than you and I said so" as an argument

REpro says

This is correct. It calls “impact fee”.

It's not just direct fees either, although those are more typical in San Francisco. The whole planning process here in the Bay Area tends to be very expensive overall and the cost per square foot for construction/addition is very high as a result. To some extent, the extremely high cost of construction sets a bit of a floor on housing prices, even though the technical value of a house is in the land.

REpro says

Where this money goes is another question.

In SF, a lot of it goes to the non-profit-industrial complex. Those guys are good at pulling in other people's money for misguided programs that don't achieve what they think they achieve.

myob says

These kinds of prices require dual high income families to afford. Where do all the average income earners live? Is everyone commuting in from Gilroy and Tracy? It's hard to imagine how this could be sustained

Came to the point that a lot of middle class earners are freak-out with situation and seriously considering moving to Oregon, Texas, Arizona, … kind similar action as in 2005-06. Bay area residents may face another household expense soon e.g. private schooling.

dodgerfanjohn says

Lol@ "I posted more words than you and I said so" as an argument

LOL @ "I can't think critically and therefore ignore data and analysis" as an argument.

Bigsby says

The obvious question being when.

This year or by 2019 by what I read in that article

indigenous says

Beaulieu also sees a 15 to 34 percent correction coming in the stock market.

He says he sees a downturn in 2019. I suspect that means the 30 percent stock market drop will be in 2018. So we are around 1870 for the S&P 500 with a market cap to GDP ratio of 116%. If it goes down about 20% to a ratio of 90%, then the market is back in the fairly valued region.

It was 150% back in December 1999.

adarmiento says

He says he sees a downturn in 2019. I suspect that means the 30 percent stock market drop will be in 2018. So we are around 1870 for the S&P 500 with a market cap to GDP ratio of 116%. If it goes down about 20% to a ratio of 90%, then the market is back in the fairly valued region.

It was 150% back in December 1999.

It is unclear whether he is talking about this year or 2019.

The main thing to know is that due to FED activity the stock market is overvalued willy nilly and there will be a large correction, so stock investment is skating away on the thin ice of a new day, to think otherwise is folly.

It's the gift that keeps on taking.

How is the earnings and revenue going to be impacted by the Federal Reserve decreasing its quantitative easing to zero ?

Look at how the sales or revenue for major bluechips like Walmart have steadily gone up since 2004.

http://investing.money.msn.com/investments/financial-statements?symbol=wmt

corntrollio says

dodgerfanjohn says

Lol@ "I posted more words than you and I said so" as an argument

LOL @ "I can't think critically and therefore ignore data and analysis" as an argument.

Point me to the data and analysis in this thread.

adarmiento says

How is the earnings and revenue going to be impacted by the Federal Reserve decreasing its quantitative easing to zero ?

I think they were saying that the impact is going to come from the impact of O care.

That and the normal business cycle.

It will be/is incumbent on Yellin to keep QE going.

Don't say I didn't warn you.

The buyer establishes the home's value.
Screw the seller,appraisers, commissioned sales people & banks. They don't care about the buyer. 10% of asking price unless idiocy is in one's DNA then all they can do is overpay.

indigenous says

It will be/is incumbent on Yellin to keep QE going.

Don't say I didn't warn you.

I agree as the Affordable Care Act (aka: "Obamacare") is going to have a bigger price tag than what it was sold at back in 2009. That is because the original forecasts were based on no exemptions and delays (i.e., for public sector unions with Cadillac healthcare plans, etc.). It will be interesting to see who the Democrats will blame for the larger prices. Will they only focus on the insurance companies ?

Perhaps there will be a bailout of the insurance industry because of this ?

As far as QE #5 from the Janet Yellin, I think the Fed may stop no further than $30 billion per month of the Federal Reserve buying mortgage back securities and U.S. Treasury notes. I do not think QE will go down to $0 for another two years.

And as a result I suspect that the 10 year Treasury Note will not go above 3% for at least another 2 years.

A home's value is based on what a buyer is willing to spend to buy it, and what the seller will agree to sell it at. And I think there are forces at work which determine this equilibrium point.

They are several rules which create these forces. Such rules are price to income ratio, Principal/Interest/Taxes/Insurance as a percentage of median household income, as well as Patrick's rule below:

annual rent / purchase price = 3% means do not buy, prices are too high
annual rent / purchase price = 6% means borderline
annual rent / purchase price = 9% means ok to buy, prices are reasonable

The bottom line is that Yellin has to keep the interest rate low in order to keep the debt service low.

A well known predictor of the economy is the interest rate on bonds in other words the higher the interest rates corporations have to pay the slower the economy.

Obama care is equal to higher interest rates. I assume this is what they are saying will influence the stock market.

"The 1980s Are Now Calling to Ask for Their Foreign Policy Back"

indigenous says

The bottom line is that Yellin has to keep the interest rate low in order to keep the debt service low.

A well known predictor of the economy is the interest rate on bonds in other words the higher the interest rates corporations have to pay the slower the economy.

I agree as long as the US Treasury 10 year note stays below 3% that the Federal governments interest payments will be less than 10% of the federal budget.

Also the lower rates means more earnings for the corporations since they pay less interest on their debt.

Lower rates force retirees to invest in stocks in order to avoid earning a paltry 1 to 2% on I series savings bonds and Certificate of Deposits (CDs).

Kerry voted "YES" on the resolution to authorize the war in Iraq, a war based upon trumped up charges.

zzyzzx says

Blurtman says

Has Russia killed 100,000 women and children in the invasion of Crimea? No.

They have killed way more in previous invasions.

http://en.wikipedia.org/wiki/Soviet_war_crimes

http://en.wikipedia.org/wiki/List_of_war_crimes#Soviet_Union_perpetrated_crimes

Did Russia engage in the genocide of an indigenous people? We are talking about the current action in Ukraine, and the hypocrisy of a country that has committed war crimes quite recently.

"annual rent / purchase price = 3% means do not buy, prices are too high
annual rent / purchase price = 6% means borderline
annual rent / purchase price = 9% means ok to buy, prices are reasonable"

It's a long winded way of saying buy in the Ghetto and not prime. Which is absolutely a mistake.

Based on that theory, someone like Patrick would buy in places like Vallejo 10-20 years ago and not buy in Menlo Park, which turned out to be a millior dollar mistake. If the rules doesn't work, it makes no sense to worship it.

corntrollio says

Read S-1s and other SEC filings and also read articles on this. You can see
how tightly concentrated share ownership is in a select few. The difference
between the shitty businesses that had IPOs in the 1999-2000 range is that the
businesses were shitty, had no revenue/profit, and the founders gave up a lot
more of their stock. Working for these shit businesses was way more risky than
working for, say, Facebook in 2010.

The companies that have been IPOing lately have had a more identifiable
revenue model, and the founders and key employees haven't had to give up nearly
as much stock.

More important is the companies that haven't been undergoing IPOs because
they sold privately. In those cases, the founders and key employees retain an
even bigger share of the pot and the VCs retain most of the remainder. Rank and
file get enough to get them not to leave their job, but it's not a whole lot
unless you were really early.

The stock compensation section of the 10-K under notes to consolidated financial statement details the options outstanding.

The biggest change in stock compensation over the decade is the popularity of RSU's, PSU's in lieu of options, especially if you are not the first several hundred seed employees. stock units guarantees a payday (if liquidity hurdle is cleared) albeit you lose the upside of sheer options where the price explodes and you hold say 30K options and benefit on the increment than say 10K units where you benefit from the entire price.

The thing is if you hit on the right company, at the right time, at the right executive level from someone I know. You didn't buy one house in Cupertino, you just bought four houses, one for each of his four kids, aged 10-18. Wealth drives future demands. People who made their wealth in the dotcom eras are the buyers the last 10 years in the valley. People who makes their wealth now, will drive demand for their next generation.