patrick.net

Three houses that were pending in around my hood just went back up for sale. One of them is this utterly crappy, rundown excuse of a house. The asking price, though high, is still way cheaper than the avg home in the area. 530k. But it is now also back up for sale. I saw the owner frantically ripping up carpet through the open door. I kinda want this guy to sell his house. He's this older poor guy driving a beat up truck. Looks like he's never had any money to speak of, so out of all the people that really don'y need 600k extra, he could use it.
But... screw it.. we young folks need our chance at something too, so the sooner it all falls apart, the better.

Saying "no" to bullcrap deals is a start!

One of the reasons we may be seeing inventory log jams in the BA (and elsewhere) is that people are actually stopping to think! It wasn't long ago folks were custom building their "dream house" BEFORE even listing their existing home! People that were "transferring" would make buying a new house their FIRST priority in a list of about 40 things that need to happen to have a successful transition. Anyone here remember when the husband would move out first, get an apartment or hotel before flying the wife out to find a suitable rental home in the kids new school district and get everybody "settled in" to their new surroundings and making sure the job worked out BEFORE buying a home?

Well it seems now "the home" is more of a priority than making sure the job works out and that everybody likes the area. Now that euphoria of easy money has worn off people are re-visiting the "checklist". I mean what's next? Will the "leap before you look" crowd demand that the negative equity from their former home be rolled into their new loan like when they trade in their car?

John M,

You know, I'm not sure if I was being flippant or not there b/c obviously the new lender would be reluctant to loan more than the house is worth. Oh wait a minute, we've been doing that for at least the last five years!

Where there's a will, there's a way and given the current state of finances I can't rule anything out! I'd also heard that a senior treas. dept. official (Emil Henry) speaking at a RE "round table" told attendees not to expect the treas. to bail out fannie/freddie! I found that frankly, shocking.

John M,

"We will remove firewood from under the cauldron" (Bloomberg article)

What can I say? Wisdom of the ages.

OO writes:
just curious, is your school district in Cupertino? Which high school it feeds into? That might explain the busy season 6 weeks ago, I am seeing the same thing with good school districts.

Interesting observation!
It's in the Cupertino school district, and feeds into Lynbrook High.
For the out-of-towners: Lynbrook High appears to be such a scholastic nirvana to some people that they pay a premium that seems equal to the price of sending two kids to a good private school. But of course the premium translates into a fraction of a low, low monthly payment spread out over 40 years, and private schools want cash today. :-)

SQT writes:
I would be a little hesitant to put complete faith in zillow’s sale numbers. One of my husband’s clients is a long time mortgage broker who can actually be trusted. She’s looked up some sale numbers for us on homes in our neighborhood, and they don’t track with what zillow says. Off the top of my head I can remember one house that zillow listed as selling for $456k, but when my husband’s client looked up the sale record, the house really went for $415K.

That makes sense.
So, the house in question (the one with $1.6mil asking price) is at 1522 Ardenwood Dr, SJ 95129. Does anyone have better information about what it sold for?

All this talk about desperatly trying to get kids into good public schools reminds me of a guy I met around 2 weeks ago. He was from Houston. Anyhow, he's been here for 10 years and recently moved to a better part of the city because the schools were somewhat better on the other side of Alameda.
We both started talking about it and agreed that when we both lived in our respective home states, we never thought that much about the public schools because they were all pretty decent. There simply were not that many private schools. Out here, people are willing to relocate and pay huge sums for a school system that needs some serious work.

Girgl Says:

It’s in the Cupertino school district, and feeds into Lynbrook High.
For the out-of-towners: Lynbrook High appears to be such a scholastic nirvana to some people that they pay a premium that seems equal to the price of sending two kids to a good private school.

Personally, I'm not planning on ever sending my kids to a school like that. I've noticed all those commercial study centers popping up all over the place named things like, "Ivy League Study" or something of that sort, for those kids who want to spend their afternoons and weekends learning how to ace the SAT's and get into Harvard. It can't be healthy for these kids.

Speaking of Harvard, I'm still tracking the listings in my old Boston neighborhood, and it's deathly quiet. Maybe 1-2 under contract among 100 or so listings in the last 1-2 months. Another posh neighborhood there, Waterfront, reports a 40% drop in PRICE YOY already! This ride down the backside will be extremely interesting. Bubble "leading edges," where prices escalated higher above fundamentals (SD, FL, LV, etc) are going to be the leading indicators of when the real earnest declines start happening.

willywhopper2 Says:

Out here, people are willing to relocate and pay huge sums for a school system that needs some serious work.

Not only that, but there are many additional costs. In these primo school districts like Palo Alto, Saratoga, Los Altos, etc., There is huge extracurricular fundraising from parents for the schools. A friend lives in Saratoga, and he reports that the district has several million in fundraising per year from parents. Of course, when the CEO of McAfee is one of the donors, what's the big deal. On the other hand, my friend reports much of the money goes to paying for teachers, guidance counselors, and other basics, as opposed to arts programs, shiny new gyms, etc.

John M,

Absolutely! And not just the Cubs, Stevie Bartman! Remember the kid that tried to grab a foul ball along the 3rd base line that started the historic meltdown at Wrigley? Since Cub fans found poor Stevie the scapegoat for their obvious inadequacies why not blame the housing bubble on Stevie!

I believe the way that the ChiSox have played so far this year proves that "05" wasn't a fluke and you can count me among "Thome's Homies"! You know, I still pinch myself every morning and having the Sox win in 05 when even David Lereah has pointed to August of 05 as the peak of the housing market (just as we stopped our AL Central collapse) belongs in Peter P's realm of destiny!

Skibum,
My wife worked in the SF school district for four years. The few times that I went with her to school functions, I was amazed that the kids were having class in alluminum trailers. That's appalling.
The whole fundraising thing is messed up. This basically means that the wealthy areas with wealthy parents will have better educated kids. This should never be the case. I'm antimate about giving every kid the same access to education, and frankly, if I ever have kids, this will unquestionably be the final straw to send me packing elsewhere.

George,

You know I've made similar observations particularly regarding a certain friend of ours and it IS exciting to see them benefit from the fruits of their labor! After all this is the BA Housing Crash web site.

Also noteworthy is the seeming total abscence of BA Troll Perma-Bulls!

I don't know if you'd noticed but the "For Sale" and directional markers have become an eye sore and issue for the Santa Cruz city council. Too funny!

Dinor,
I think the most promising sign has been the advancement of sites like boycott housing. To me, that site represents more of the kind of folks that are your average everyday folks that are finally smelling something funny. The comments on there are very telling, and the number of comments has almost quadrupled in the last 2 weeks. There are a lot of sites like this, where ordinary people go. While this site has what we might consider " more enlightened", once you start seeing sites like those above filling up with people, then there's evidence that the masses are getting educated rather quickly.

WW2,

Oh absolutely! We can debate the effectiveness of boycotts until we're blue in the face but however misguided we might see their efforts they appear to be getting the word out and the "word" is gaining traction! I'm squarely in HARM's corner b/c I'd rather shake things to their foundation by making real reforms to open up the MLS, do away with shotgun appraisals and take a long hard look at our tax code! But if these guys are "gittin' her done" God love 'em!

Dinor,
what I like about the "boycott housing" site is that it seems to be the first sign of a new more widespread recognition of the problem. I mentioned yesterday the effectiveness that a well-informed liberal mass can have on an area. I've been hoping for years that SURELY the same people that protest the war would jump all over this. If you piss off the folks in Berkeley, while they wouldn't be capable of changing legislature would at the very least jolt people into the recognition that there's a problem.

LILLL,

My brother in law, great guy from South Philly. Works for a VERY conservative accounting firm that wanted to transfer him to their Los Angeles branch. Even though the firm offered to buy his house at FMV he said he would make an effort to sell it someone in the family first.

After accepting the position he made arrangements to occupy a rental home while he "checked out" the local market. This took a year. They finally settled on a place about 15 minutes north of Pepperdine and have been there for ten years. I'm not saying this is necessarily for everyone but wouldn't making sure your home can be sold first be a logical step in the process? As more folks rediscover sanity we'll find that "reversion to the mean" isn't strictly an economic term.

@John M.,

I'm 100% sure Unalloyed is not a troll. He's been posting here for a long time, and, as far as I recall, is a bubble-convinced JBR like ourselves. He just has a unique, slightly offbeat sense of humor (as do many of us). :-)

DinOR, WW2,

Ok, then --I get it. "Boycott housing" as practical concept = non-starter. Boycotthousing.com as venue to raise public awareness & "get the word out" to the masses = a good thing. I'm on board with that.

Sir HARM, Protector of Possibilities

Hmmm... rather metaphysical that one, not bad. Or, how about "Sir HARM, Debunker of Realtwhore Propaganda"?

Last year, Peter P was granted the title of "Darth Bubblehead" by Fake P (or was it Face Reality?). However, given his recent *ahem* crisis of certitude, this may no longer apply.

However, given his recent *ahem* crisis of certitude, this may no longer apply.

Huh?

Peter P said:
Huh?

Follow the link.

HARM,

"Debunker of Realtwhore Propaganda"

Most fitting! Any luck getting Leslie to post those affordability numbers? Thought not! It's taken what 6 months for them to come up with some kind of spin and they still can't deliver the goods?

Happy Father's Day in advance to all the Dad's out there! I don't expect to hear much complaining as this bubble bursting for the benefit of your children is all a dad could ask for!

Arrogant people who told us that we should buy before we’re “priced out of the market” have gotten very quiet lately.

Perhaps... they will say... now is the best time to buy?

Polishknight,
The "fix" is to fix the public school system to start with. There is NO REASON whatsoever that California school systems are in as bad a shape as they are. Not too long ago, they were ranked amoungst the best in the country.

I haven’t convinced anyone that actually owns yet….They just keep on thinking that their place is worth uberbucks…

No need to....Darwinism will do that for you!

John M,

You will get the keys to their McMansion when you pry them from their cold dead hand!

One of the quickest ways to decrease your popularity is to even invite the possibility of a bubble in a work or social environment. One poster here even had his screen name used, abused and linked to a totally insulting "slam site". Others have been shunned at work and are avoided by their neighbors. All the king's charts and all the king's graphs won't impress them a lick!

Then it was determined that this was unfair.

Any attempt to level the playing field will end in failure. We MUST accept that some people are better than others and some people should simply be abandoned.

John M,

Persuasion? Why would you want that? Me, I'll be happy going sailing, taking road trips and generally doing things that have suddenly become unaffordable for those others. Oh, wait, you were talking about loved ones.

Hmm... depends on the loved one, I guess. If they're completely in "lalala I can't heeear you" mode, you most you can do is make it clear that if they do something stupid, you'll rip out their eyeballs and skull-f... well, you get the idea. It's for their own good, of course.

I've never been one to persuade, but I'm happy with teaching. People seem to understand the concepts better when the "waittaminute... this is a problem after all" realization comes from within.

If only it were just "lalala I can't heeear you mode"!

I know believe I have a glimpse at what substance abuse and gambling counselors confront. You talk to friend in a very neutral and non-confrontational manner. Explain calmly that the moves he/she is contemplating (while not w/o upsides) may pose issues for them down the road. They nod and agree and then go on to explain to you that they are fully on board. They see many of the same things that you do! So they disarm you b/c now you're relieved. Then they drop the bombshell that all of these issues are happening "someplace else" and are a non-issue HERE and then they go on about their way (and get this) with even greater resolve!

No More Counseling. Period.

Any attempt to level the playing field will end in failure. We MUST accept that some people are better than others and some people should simply be abandoned.

Peter P,

I must respectfully disagree. You appear to be confusing "levelling the playing field" (i.e., providing equal OPPORTUNITY) with "making everyone equal" (i.e., Communism/Socialism). The former to me is entirely sensible, and should be the general aim of social policy for all democratic civil societies, while the latter is a thoroughly discredited political/economic system.

Most forms of regulation, especially anti-monopoly and anti-corruption legislation, were designed (in theory anyway) with the aim of levelling the playing field, so that the less privileged (middle-class, working-class & poor class) don't get completely steam-rolled by the greed, corruption and un-earned advantages of the born-rich & powerful. Some may consider this a form of "social engineering", but then again, I am not a strict market fundamentalist. I see a role for regulation to play in righting some of the wrongs/imbalances that result from completely unfettered market capitalism.

I am not in favor of government creating moral hazards by subsidizing lazy people (welfare for healthy people), money-losing industries (big agriculture), or trying to "pick winners" in the free market via ill-conceived tax-subsidies, price/wage-fixing or cronyism. However, I see nothing inherently wrong with protecting consumers from fraud and prosecuting those who perpetrate it. I see nothing wrong with providing reasonable minimum safety standards so people aren't needlessly killed on the job to add a few cents to the CEO's stock options. I also don't have a problem providing a little money to children of poor families, so they can afford go to school and hopefully pay us all back by becoming productive members of society.

SP,

"I think you should buy more"

And I'm fine with that b/c by that time either you need to get another drink or you can excuse yourself to use the "facilities". But it has gotten depressing in that over the last 5 YEARS it seems like all people talk about anyway is how many ha-ha's their sh!tbox is worth. Speaking of getting a drink, in......... 33 minutes?

Central Coast bounce:

Listings 3151 today vs. 1205 a year ago.

Price reductions 828 for first two weeks of June, vs. 438 for all of June, 2005.

Lots of bounce this spring! ;-)

Robert Cote'

True, true. Zinfindel may not know the time but Mrs. DinOR does. It's just part of my "discipline". Whan I was in the service our motto was "No Drinking within 12 hours (prior to flight operations) and no smoking within 150 feet. Later we changed that to read: No Smoking within 12 hours and no Drinking within 150 feet.

Whan=When?

HARM,

I think you're conflating a bit. "Levelling the playing field," particularly anti- corruption and anti- monopoly safeguards does not equal doling out the same monies and resources to all schools, no matter how bad they are or whether or not their students have a desire or aptitude for all the same intellectual, career, social pursuits. Nor does it mean recognizing that intelligence, athletic ability, social skills, etc are the same in every individual. Not only is the basic concept wrong, but every attempt to legislate this concept into the schools has been a failure, as far as I know.

DinOR,

Do you drink after the closing bell every day? Nice ritual, I must say!

skibum,

Nah, I wish. Just on Fridays! TGIF? Mondays are tough enough as is. Personally I don't see how all those east coast hard asses drink every Sunday too? Hey, you guys are in your 40's! When do you slow down? My Doctor said I have the liver of a teen ager, but quickly added, "don't let that give you any ideas".

must respectfully disagree. You appear to be confusing “levelling the playing field” (i.e., providing equal OPPORTUNITY) with “making everyone equal” (i.e., Communism/Socialism). The former to me is entirely sensible, and should be the general aim of social policy for all democratic civil societies, while the latter is a thoroughly discredited political/economic system.

But that would assume that everyone deserves the same opportunity.

Your proposal is sensible but we need to be very careful about the side effects.

DinOR,
Speaking of the market, the runup over the last 3 days - the WSJ suggests short sellers did this (in part) - do you agree?

WRT schools, doling, etc.

This looks like one of those fun areas where theory disagrees with practice. (Best way to spot an idealist/extremist: someone who, when theory and practice don't jive, steadfastly maintains the correctness of theory.)

This looks just like welfare (and any aid system, for that matter). If it is possible to game the system, it will happen. It is therefore critical to determine the extent of the gaming, and reduce it to below a certain level. Doling out equal resources [for schools] (where 'equal' is based on purchasing power, where relevant) seems a good basic start, but I assume from the comments of others that it had some significant problems. Setting a minimum level, with significant performance-based increases may work best; most of the arguments against "pay based on performance" only hold water when schools can be underfunded, which can effectively prevent significant improvement.

(I know that some teachers will teach effectively at almost any level of resources, but referring back to my theory/practice idea, I don't think we are lucky enough to have sufficient teachers of that quality.)

skibum,

Yeah, there probably was a lot of "short covering" but this is the Summer of IT so I think someone will have to make a pretty strong case for me to turn bullish (short term). Today also happened to be "triple witching" so it just felt like the market was sort of holding it's collective breath.