patrick.net

Why get jumpy? Inventory is low and should come up soon... maybe. How much does all of this REALLY matter for a long term investor?

BTW, not I'm trying to get your goat. Just a thought question.

" The market i is FAR FAR FAR more hostile..."

Call me ignorant, but perhaps I didn't get it. Are people taking punches at each other to get the properties, or is there a gladiator arena out there, to battle for the right of purchase?

Anyway, I gave this a +rec since I see potential here and it covers the "hands on" point of view as a good balance...

cheers.

Maybe it is the elite top 1% (or even 0.1%) net worth Americans that are buying them all up with cash.

Any comments about the pair on Victory Lane. The home at 1128 Victory Lane appears to have been foreclosed for under $200k in December 2010. Is anything on the courthouse steps looking enticing these days? Short sales seem to be ruling the day -- is this ruse all part of extend and pretend, or the REIC at its finest?

Ducky, Regarding the short sale shenanigans -- well, if anybody can give the REIC a kick in the pants, I'm betting you could. Either a full frontal assault on the brokers repesentin' or through the back door directly to the banks. It would probably be a major PIA the first time around, but perhaps you could refine a strategy that you could use effectively on other stalled short sales . And, of course, share with us on Patrick.net...

Btw, what's the deal on short sales? - is the debt "forgiven" or being collected at some point later?

yeah, definitely too far from you unless you don't mind the long distance landlord biz. The area is beautiful - many houses with awesome views, new, updated and dirt cheap. I wish I had 200k disposable cash laying around...

In general, are pools really that troublesome? (when you are renting the house out) - can't you have the tenants sign a piece of paper that waives your liability?

Don't get your hopes up - Mr. Quack. You can't just will these prices to go up. This pipsqueak of a spring bounce is definitely over, now, and the steamroller bust is dead ahead:

http://www.redfin.com/city/4150/CA/Concord

Yeah, better hurry - prices are going....

down.

Silly duck.

I have observed several homes in Moraga lately have changed hands without entering the market ... one day a "sold" sign appears, along with a new family.

Nomograph says

I once bought a place with a pool. The first thing I did was bring in a backhoe guy who punched holes in the bottom, tore all the coping and sides into the hole, and brought in fill dirt up to level. I then had a patio poured and no worries since. Cost me about 5K when I did it.

Wasn't it hard to swim in?

I don't see what's so special about homes in Concord. Why do you always have to buy there?

I recently had the exact opposite experience with a real estate agent that lists a lot of REO properties. I called to inquire about a listing of his and he immediately began to tell me about financing options, amount required for DP, etc. When I told him I'm a cash investor, his immediate reaction was "if you have cash, I'll be your best friend in this deal." In this down market where financing is very difficult to secure for a lot of buyers, cash is king and speaks volumes during negotiating. Banks see "offers" all day long that require financing on their numerous REO properties and short sales. They typically get trashed, unless it is a particularly difficult property, or the offer has very substantial down payment money. Cash on the other hand makes everyone sit up and take notice. I find it impossible to believe an agent wouldn't even bother writing up a "full price cash offer" unless it is "sold" and within a couple of days of transferring title.

Katy Perry says

I think any real deals right now are not even shown to you. Folks in the business get them first then flip them to you.

Sadly this is sometimes true. I always advise people I know who are buying a foreclosure to send a copy of their rejected offer to the banks. In fact, I suggest everybody do it for all sale types. Send a copy to the owners via express mail.

The game is owned and run by realtors. That same unscrupulous prick that would go out of his way to fuck you over for a commission wouldn't hesitate to direct a "deal" to his friends and family. It's all a big incestuous circle jerk, not unlike Wall Street and inside trading. I've heard some people say "if you can't beat them, join them," insinuating that can be upset about this or try to get in on it. This is a sociopathic mentality in my opinion. These realtors need to be exposed when they do this.

We're talking about resale homes in Concord, CA, and you post a chart for new homes in the whole U.S.

What little credibility you had here is now completely gone.

klarek says

There’s no way for him to prove that the agent said “don’t bother”, so there’s no way the agent can get in trouble until an offer is sent and rejected (thrown in the trash by the agent).

An agent doing this independently of his/her instructions from the seller would lose their license and also be liable for a huge law suit. I'm not trying to defend agents, but they would have to be totally nuts to pull such a thing.

Move to Encino/Tarzana buddy. We have tons of houses out here with signs, have been there for a while.

Here's a refresher course, kids:

http://www.realtor.org/wps/wcm/connect/5e37be0045ba291385f5c7342c47dc89/REL10Q4T_rev.pdf?MOD=AJPERES&CACHEID=5e37be0045ba291385f5c7342c47dc89

Median U.S. price 2010: $173,200

http://docs.google.com/viewer?a=v&q=cache:ikHrBAiDn4YJ:www.realtor.org/Research.nsf/files/MSAPRICESF.pdf/%24FILE/MSAPRICESF.pdf+median+home+price+2006&hl=en&gl=us&pid=bl&srcid=ADGEESj7ef9duPjkETtV23kQUzlSNbvtWugxV8aDLaZAVUcTWx3_oeohxxDEhDkWwx3oFN50z1cAEC0xZHBCVg-kzL7C-5A6o2TtI52SCF8wRYOLZt94Vi4RCNALU7we3ugD6vt7WQB_&sig=AHIEtbSLXeDzjGeamK_If0PGrLXvdgxiSw

Median U.S. price 2006: $221,900

Any questions?

I don't think the trend is toward bigger homes, I think it's the reverse. With the aging population, people won't want bigger homes, they'll want smaller, 2 or 3 bedroom homes.
When you're in your 80's, a smaller home with no stairs is easier to get around in and clean. And a smaller home is also cheaper to heat in the winter.
Since there will be more older people in 30 years, which size homes do you think will be more popular?

waiting_for_the_fall says

Since there will be more older people in 30 years, which size homes do you think will be more popular?

A big house so the family and extended family can live with the aging Matriarch and or Patriarch.
To help with health and cleaning and general upkeep. Much like it is in Asian countries.
"I think we might be all turning Japanese I said I think so..."

Or Chinese at least.

Fisk says

Russians are buying. They can’t be wrong!

The Russians are coming. The Russians are coming. Quick, buy everything you can. Bid at least $100K over the asking price. Remember, house prices always go up.

I tend to think the article is right, "in the future". But I also think that, with the still huge number of pending foreclosures, in-limbo inventory, boomers downsizing, immigration much restricted, mortgage lending much tighter, and new college grads graduating later and eyeballs in debt, that future of major new housing appreciation cycle is much further away than portrayed. Say, more like a decade than year or two.

As to renting out, yes that could be quite profitable for suitable properties, mostly multi-family complexes and townhouses. But most larger SFH are not in that category, at least in our area.
A neighbor of mine used to buy and rent out SFHs since 1970-s, but sold them all a few years ago and now owns apt. complexes only. He tells me that is a much better and easier business.

dunnross says

Fisk says

Russians are buying. They can’t be wrong!

The Russians are coming. The Russians are coming. Quick, buy everything you can. Bid at least $100K over the asking price. Remember, house prices always go up.

What ever happened to the rich Chinese or Indians that were supposed to be buying up everything ? Anyway, so far ONE deal which made the headlines and the bulls are still full of it. And that Ruski isnt even gonna move to the Bay Area. I guess next it will be Japanese Billionaires escaping Tokyo.

APOCALYPSEFUCK says

Extraterrestrials are well-known savvy property speculators and recent UFO activity in the west indicates they’re here to BUY and buy big. The smart investors will get ahead of the space ships and clean up!

Kind of investors that only you could imagine. I guess after the earthly RE fiasco we need em!

I feel like I'm changing my mind every single day whether to take the leap off the fence this summer or not....

swebb says

Your example demonstrates how median values can be skewed, but it’s a toy example and I think it can be controlled for. I also agree that the median will be skewed depending on which segments of the market are active. It’s good to be aware of the pitfalls of using median prices, but I think they can still be helpful if used carefully. I try to do a few things:

1. Use a “large enough” sample set to avoid the problem you illustrated.
2. Filter the data to similar houses, similar area (same neighborhood, 3 bedrooms, e.g.)
3. Control for different house sizes by looking at price per sqft.

It’s not an exact science, but I think it has some information content.

Very well said.

I like the Los Altos charts because they include a ppsf chart, and they show a 7-day average juxtaposed with a 90-day average. The 90-day average gets rid of the noise in the data by averaging it over a longer period of time. It's not perfect, but it's certainly useful.

Thanks for the comments everyone!

Anyway, I love these real life experience posts...

OK.....those of you that want to pound on the table and use data and charts to prove a price point will ultimately lose the game. Those of you that pretend that you are Realtors are setting yourselves up for a negative fall. RayAmerica's comments about Realtors and offers are 100% accurate. The secret is easy.........find the best agent in whatever city you are looking in ( try Council of Residential Specialists directory ) based on sales activity in the exact market you want. A SUPERIOR agent can manipulate data that is only available to practicing professionals to produce market analytics and sales trends down to City, neighborhood, street, square footage, development, whatever. Shelf the median and average B.S. and get real numbers. Then flag the filtered criteria with instant notifications to you and your Realtor. Then work the database for any units in pre-forclousure via the Public Information available to the same professionals. That will give you the current lien holder or servicing agent. It's not an insider beating you to the punch, it's usually the ignorance of the Buyer. Did I mention that a SUPERIOR agent does all this for you?

jeffspaur says

A SUPERIOR agent can manipulate data that is only available to practicing professionals to produce market analytics and sales trends down to City, neighborhood, street, square footage, development, whatever. Shelf the median and average B.S. and get real numbers. Then flag the filtered criteria with instant notifications to you and your Realtor. Then work the database for any units in pre-forclousure via the Public Information available to the same professionals. It’s not an insider beating you to the punch, it’s usually the ignorance of the Buyer.

Unless there is information that the agent is privy to that I am not, there's no case he can make with anecdotal or aggregate data that I couldn't do (and do better) myself. If there's something he's looking at that I am not, then that is because the game is being rigged by a cartel. You're essentially saying that this is the case, but I for one resent the "go with the guy that has the secret numbers if you don't want to get screwed" justification for having to use a realtor.

SubOink says

In general, are pools really that troublesome? (when you are renting the house out) - can’t you have the tenants sign a piece of paper that waives your liability?

Not in CA. Legal system does not recognize certain waives of rights/responsibility. This is one of these items.

Good article. These NAR guys sound like that ahole from the 80's who used to sell a book on "Secret to becoming rich". Forgot that guys name, but sounded about the same.... total BS and nothing more. As always same old selling lines.... buy now or be priced out forever, others are doing it so jump in before its too late.

I called agent and offered 100% cash for asking price. She said “don’t bother, you’re not going to get it.” Huh?!? High possibility of agent cock-blocking on this one as she did her best to talk me out of being interested.

Realtor wants to see it to someone they know for well below asking price so that they can flip it.

Mr.Fantastic says

I have followed Reggie for the past 2 years. This guy kicks Case-Shiller all over the place. This guy is the anti-Lawrence Yun, because he actually understands the market based on fundamentals.

It's hard to believe Yun has a PhD. NAr just combs through a field of credentialed Economists and finds the one that's willing to sell his soul to help the cartel fuck people over. And Yun is their guy.

Three Bays says

- If you’re going to look at trends for the median prices, the least you need to do is adjust them for seasonal variation. As someone pointed out, these graphs oscillate with season, so if you don’t adjust for that then forget about any comments about what’s up or down or preceding what.

So you can't look at this chart and identify that prices have gone down in Concord over the last year? Is that all a "seasonal variation" that lasts for a year?

shrekgrinch says

ch_tah says

That doesn’t even make sense. You can’t be underwater if you buy with cash.

Not my prob if your reading comprehension skills suck.
If you buy a place for cash for $100,000…and in the future it is valued at $90,000…then you are underwater by $10,000. If you sell it at that market price, that ‘underwater value’ converts into a real cash-loss of $10,000.

It is your problem if you don't know what underwater means though.

shrekgrinch says

ch_tah says

That doesn’t even make sense. You can’t be underwater if you buy with cash.

Not my prob if your reading comprehension skills suck.
If you buy a place for cash for $100,000…and in the future it is valued at $90,000…then your investment is underwater by $10,000. If you sell it at that market price, that ‘underwater value’ converts into a real cash-loss of $10,000.
What is the comprehension problem here, exactly?

My understanding was that when referring to houses being "underwater," it usually means that the person owes more than the house is worth. Hence, if there's no mortgage, you can't be underwater. If you use a strict economics definition, it can mean a price lower than the purchase price, so the statement itself isn't completely nonsensical, although the theory that cash investors are going to rush to sell because the value of the house has dropped 10% seems a little sketchy and completely ignores the fact that the house may be cash flow positive where the investor isn't concerned with a temporary drop in principal.

And San Diego....

Once again, it seems that that sharp uptick in asking prices didn't actually happen.

I can only guess that the spikes being shown in current charts are likely to mysteriously disappear as well.

If I were a banker holding the 2nd, I wouldn't give up claim on payments just because the bank with the first did a write-down. I would want to force the homeowner to either give up the house or make payments to insure that I got the most value out of the loans. If it is in the owners and 1st holder's interest to do some sort of write-down agreement, then they should have to pay off the 2nd or make some deal with the holder of the 2nd.

I think no one truly knows exactly how DELUSIONAL sellers right now are.

Not only sellers, but *some* landlords as well.

As to the sellers...I posted a thread on city data forums in the Los Angles section about LA real estate. Much much much defensiveness from homeowners...almost like they are all relying on their home as their retirement plan(which is probably the truth). A TON of denial and every excuse in the book as to why LA county real estate can't possibly fall further.

As to landlords...I live in downtown LA. I got into my loft late last year when they were still running incentive. Prime prime prime location, older building(but renovated with modern kitchen and upscale furnishings), no pool, includes gym Gold's membership, water, trash, also a $1000 gift card at move in. 850 sq ft, $1550 per month after incentives(2 mo free on 14 month lease). At the time, this was the only smaller unit available(theres also 650 sq ft units but again none available). Only one larger unit available and anything that they had available went within 5 days. Fast forward today and all incentives are gone. I think its cause the same size unit in the newer and more upscale market lofts runs around $1900/mo and in the upscale Watermarke building, a 850 sq ft unit is $2500/mo.

Now some explanation about Watermarke...opened a while ago and supposedly completely rented out at the time(cough...bull-----sh--). One problem. The buttheads there are now spamming craigslist like mad. Really, who thinks there are THAT many people who make $125-130K a year and don't have families(very very few families downtown...I think maybe 5 in my entire building, all with children under 5...less than school age).

In short, I think Watermarke was lying about being full. I call shennanigans big time. Same for market lofts. And guess what...now my building...which was as close to 100% occupancy as one can get is not only having available units, but also is having many people trying to break lease...at the new rates, not the discounted one.....Anyone out there want to guess what the next thing to happen to this market will be?

And to add further fuel to the fire...theres several buildings near Staples that were trying to capitalize for a couple years on proximity to Staples and LA Live. Rates were stratospheric IMO....$2K a month for 500 sq ft. FAIL! A few of those very upscale nice buildings have dropped their rates into the same range as the new rates at the building I am in. I *knew* this would happen eventually, I'm just very surprised it happened all within a 3 month period.

Point of all this....

1.) List prices are irrelevant and just ridiculous as an indicator of anything. Could be more expensive properties comming up for sale. Could be loony sellers.

2.) The BS being spewed about rising rents is just that..BS. Hoping and wishing do not make things so, despite real estate agent assertions to the contrary.

Not good.