patrick.net

BayBear,

Loved your comment about "rates aren't the problem" btw!

I'm not sure the article "proved" conclusively that prices will start up again after a brief stabilization period. Would realtors and owners LOVE to see that? Sure (so would I if I was in over my head).

Anyone "scripting" a hasty recovery had best be twice as careful about their position as the bears at this point!

Baybear,

Low mortgage interest rates are a lot like giving out zero percent loans on new cars, or putting on lipstick. It'll make a roadster or a pretty girl more attractive, it might even get a lot of people to put up with an average car or a plain girl, but it's not going to move Pintos or make a pig more kissable.

But that’s only true in a few outrageously overpriced downtown and midtown Manhattan locations. Most NYC housing is not nearly so expensive and there’s more apartment rentals available.

NYC is also financial services dominated and those jobs tend to pay better than tech nerd jobs prevalent in BA.

Sort of... housing outside of Manhattan is pretty cheap. I regularly tell people here that I want to move to NY because it's cheaper and everyone gives me a "WTF" look. It's true. Two words: Long Island. Great homes, amazing schools in most places (at least you don't have Mountain View PD coming by to explain how to identify the Nortenos from the Surenos after a stabbing incident).

But actually, pay isn't better overall. NYC is financial services dominated, but that's a really smart part of the employment base. Everything's connected, but overall the pay in the BA is dramatically higher than in NY.

Why Mountain View? Some condo/townhouses have gardens. Some SFHs only have small decks.

Here's a question that I have - if an earthquake came and destroyed your home...

House: You still have the land

Condo/Townhouse: What do you have left? Air rights?

How does that work?

Condo/Townhouse: What do you have left? Air rights?

Some condos have earthquake insurance. I thought some townhouses have fee-simple land ownership.

I grew up in Mountain View. I still do not understand why anyone would want to live there.

1) It's closer to Palo Alto (better restaurants)

2) It's closer to work for a lot of tech companies - shorter commute

3) Easy access to 101, 85, 280

4) It has every box store, just like every Bay Area city (thanks Prop 13!)

I thought in much of the Bay Area the land is not much more than half the total price of a new house.

Does anyone here read OC Renter's blog (bubbletracking.blogspot.com)? I just discovered it last night--it's a good one. Thorough, well researched and funny!

He goes into detail on some local markets in the bubble zone and his insights are quite eye-opening. For instance, I think his take on Thousand Oaks is pretty good. TO is home to two big companies--Amgen and Countrywide. Countrywide just annouced 4-5000 layoffs. Amgen has frozen hiring. This is in a small city of 121,000 people (probably around 70,000 households). Most buyers in the area "traded up" to their $1.5M mcmansions by selling their last house for $1.2M. First time buyers (unless they are movie stars or professional athletes) are completely priced out. The trade-up buyers are not necessarily "FBs" because they can afford their mortgages. But when the music stops, they will lose 100%+ of their equity (even if they manage to keep their home). Most will probably refuse to sell.

He also researches some individual flippers and provides details on their situations. Pretty interesting reading. Here is a link to his Thousand Oaks analysis:

http://bubbletracking.blogspot.com/2006_07_01_bubbletracking_archive.html

1) It’s closer to Palo Alto (better restaurants)

4) It has every box store, just like every Bay Area city (thanks Prop 13!)

So East Palo Alto must be very prime.

1) Even close to Palo Alto.
2) Close to employment
3) Easy access to 101, 84
4) Ikea!

eburbed,

I was thinking mostly of NYC but you're right, Manhattan would equal SF, so it's fair to look at the entire tri-state area to compare to BA.

Manhattan would equal SF

Probably. But some parts of Manhattan is crazy ($3000+ /sqft).

Baybear--are you sure you can't get a new lease? If the landlord goes BK, you may be able to continue renting, though I believe you would need to contact the bankruptcy trustee. Even if the property is sold, the new owner may want to continue renting the property out to you...

Have you received a 30 day or 60 day notice yet?

Baybear,

Why not just start looking now and then bargain with your landlord when you find something you like. The rental market is pretty strong so it might take you a while to find something you like for an acceptable price.

If Kim Barnes is so sure of her sentiment, then why not profit on it.

With all the "media hype" scaring unwary potential buyers away from the market, why not offer a form of "bubble protection insurance". Seems to me she could insure their homes at 100% of SP value for a nice handsome 3 year insurance policy. She could probably get 3+% for that and even convince a lender to bake that into the loan somehow.

Of course if she's wrong -- which she's sure she isn't -- she'd have to pony up quite a bit of dough.

I have never seen a condo in SF that costs more than $2000/sqft. Do they exist?

BayBear,

In SF, Marin and perhaps some areas of the Peninsula upper-end rentals have become multiple-bid situations. Even single family detached home rentals are moving in under a week, often for prices I wouldn't have bothered to laugh at a year ago.

I am surprised how quickly this segment of rentals has appreciated. 6 months ago I was trying to leverage my LL to drop our price by 20%. Now he's complaining about the extension option lease he signed with me, which allows me to stay here until Spring '08 at a fixed option price, but for the same rent. When we signed, it was a good deal for him (assuming mild appreciating rents at CPI). Now it's a great deal for me.

I love call options.

George,

what pray tell is the magic number? 4%? 3%? 2%?

I'll do it for -2.5% (note the little '-'). I'll even move to FL for that deal. :)

Peter P,

Condos have more cachet in NYC than in SF. Manhattan's market is dominated by co-ops (with strict and intrusive review processes) that render condos more desireable. The pricest condos are also prestige new construction with big name backers and architects and on offer to the richest people in the world.

In contrast, SF really doesn't attract as many billionaires checking out the very top of the food chain, have less attractive top end condo offerings, and condos are considered less desireable than SFH. Buying SFH in NYC (as opposed to townhouses, which seems to be going for at least 4 to 5 million) will run north of 20 million dollars and rarely ever even come on the market.

Comparing top price in the two cities doesn't do much unless you're already a billionaire or near billionaire. I'll check out a market based on what I can afford, not what I could afford if I was Mike Bloomberg.

FL is probably fine, but it's got heat and humidity all summer and mosquitoes and alligators and hurricanes and no mountains or skiing within driving distance. Which is all fine, if only the prices went back to 1994 levels.

George,

No need for a magical mortgage interest rate number. I'd move to FL if there were paying jobs there and houses cost $25K each. For that price, I'd move there even if the 30 year fixed rate was 100%.

George,

Nice house, now if only the company my husband works for would relocate........

Oh, well, never mind.

George,

"- hurricanes: Its like a roller-coaster ride that lasts for six hours. Oh, and it probably knocks out the power too. Afterwards, however, its like camping in your dark living room with MREs and canned food. Bonding time, I tell you, Bonding time!"

LOL! Show me some mosquito infested swamp land already, I'm sold!

I got one for the 1994 price levels. -- "You have to look at RE prices in petro-dollars and gold-dollars. Look at how much gas went up since! Florida's real estate is barely keeping up. And look at how much further "econometricians" are predicting oil could go up to, there's upside, I tell yah!

George,

O.K so it's been a few days since you've talked to a bona fide buyer, but you do have ONE good point! The Bonding!

When I was stationed in the P.I we would get 24 hour notifications from the weather guessers. Often they would shut the power down as much as 12 hours early! Our solution?

Typhoon Party! We would literally run local stores out of ice, beer, rum and coke! Then we'd have to hook up somebody's car stereo and run the wires into the patio and charcoal grill until the power came back on! I got to tell you man, they were fun! Some lasted as long as 48 hours!

So, in 25 years when miami and tampa (which have downtowns located below sea level) turn into Venices, we should be sitting pretty.

Anybody see the Al Gore movie? They showed a computer illustration of what Florida would look like if the Greenland ice glacier melts and sea levels rise 20 feet. The state was about 3/4 underwater. The caption on that picture should have read "Al Gore gets his revenge on Florida, circa 2025."

The caption on that picture should have read “Al Gore gets his revenge on Florida, circa 2025.

Funny you mentioned that. Pluto will enter Aquarius around 2023. Perhaps astrology can be quite literal? :)

Glen,

Well, it wasn't really Floridians who went against Al Gore, it was that stupid butterfly ballot that caused Palm Beach Jewish retirees to accidentally vote for Pat Buchanan.

If all the Greenland ice melted, I think we have a much bigger mess on our hands than a couple underwater Florida condos.

Sorry for the hyperbole...I need to check facts before posting...I think it was actually 100 years as the timetable and maybe 1/2 of Florida was underwater. Here's an article with a similar picture:

http://www.underwatertimes.com/news.php?article_id=74261835910

If all the Greenland ice melted, I think we have a much bigger mess on our hands than a couple underwater Florida condos.

True. But I pity the saps taking out those new 50 year mortgages... By the time they pay off their mortgage (if any of them ever do pay off their mortgage) their underwater mortgage will be replaced with an underwater property. (Sorry, that was bad.)

I don't know if global warming is really a problem. Maybe it wouldn't be so bad. We could open a glacier pipeline to get fresh, cold glacier water to all the refugees. The Canadian and Siberian agriculture industries would boom to produce plentiful food for everyone. I just wouldn't want to own any low-lying properties. (I'm talking to you, San Franciscans and New Yorkers.)

The problem with Doomsday Pools is you can never collect. Nevertheless, I'm in for a solar powered radio, 2 boxes of ammo and a crate of canned peaches. I'll take November 13, 2017.

That solar radio comment was dumb.

George,

Would that be in USD, Euros, or petrodollars?

On second thought, I'd be up a bottle of penicillin capsules, two large bags of tortilla chips, and some water purifying tablets. July 16, 2015.

Glen,

Yeah, except most of Europe would be 2 or more climate zones colder and drier, and most of the Netherlands would be underwater. Many of the glacier/ice melt rivers would become much less predictable and have longer dry periods (including the Ganges, the Mekong, the Yangtze, and the Colorado river systems) Africa will probably suffer worse even worse droughts. Major die offs in the world's fisheries.

It'll be quite an adjustment.

According to the Mayans, the 4th world (this one) finishes on 21st December 2012 - to make way for the final, 5th world.

So - my date 12/21/2012.

25 litres of distilled water, 10 packs of vegetable seeds and a machete.

Oh, and let me throw in a pair of Nubian pygmy goats, just to sweeten the deal ;-)

Yeah, except most of Europe would be 2 or more climate zones colder and drier, and most of the Netherlands would be underwater. Many of the glacier/ice melt rivers would become much less predictable and have longer dry periods (including the Ganges, the Mekong, the Yangtze, and the Colorado river systems) Africa will probably suffer worse even worse droughts. Major die offs in the world’s fisheries.

Well, it is hard to predict dynamic systems. We may find that new rivers replace the old ones, new sources of food become plentiful, etc... I agree that the first 100 years or so would be pretty tough and major dislocations would arise. But I think people would eventually redistribute themselves geographically and make the necessary adjustments. This is one more reason why I think people should be relatively free, without interference from governments, to choose where on the planet they would like to live. People will naturally gravitate to areas that have the resources to absorb them. We will all need to learn to get along a lot better with our neighbors.

According to the Mayans, the 4th world (this one) finishes on 21st December 2012 - to make way for the final, 5th world.

So it is fine to get a 5 year "fixed" NAAVLP loan starting next December? :)

Major die offs in the world’s fisheries.

Huh? 8-O

In contrast, SF really doesn’t attract as many billionaires checking out the very top of the food chain, have less attractive top end condo offerings, and condos are considered less desireable than SFH. Buying SFH in NYC (as opposed to townhouses, which seems to be going for at least 4 to 5 million) will run north of 20 million dollars and rarely ever even come on the market.

That should probably have read Buying SFH in Manhattan (as opposed to townhouses, which seems to be going for at least 4 to 5 million) will run north of 20 million dollars and rarely ever even come on the market.

There are plenty of SFHs in Queens that are affordable.

What sad is that the most dangerous parts of the Bay Area cost dramatically more than the most dangerous parts of NYC.

See the comments on this post: http://www.burbed.com/2006/08/08/burning-hot-city-heat-maps-silicon-valley/

Glen,

It seems to me that genocidal wars are more common than peaceful migration and population redistribution. Europeans obviously have more resources and they're not as heavily dependent on agriculture, but it will mean a dramatic drop in living standards due to increased energy consumption (colder winters, hotter summers) and higher food costs.

As for the glacier/snowfield fed rivers, the problem is that the glaciers would retreat to nothing. Those sources are not replaceable. The water that used to run until the next monsoon season would simply not be there.

Higher temperatures will also lead to bigger storm systems and higher evaporation rates, so the world would end up more like the desert southwest - more flashfloods and more drought periods.

Peter P,

Major changes in ocean salinity or temperature will cause some fishery die offs. Others may replace them in time, but the transition could mean higher fish prices for certain fishes. This does seem like more of a problem in the Atlantic than the Pacific, for the time being, if that's any comfort.

eburb,

Yes, thanks for the correction. I had gone back to the Manhattan = NYC mindset. I assume most multimillionaire buyers at the $2000+/sq ft level do not bother looking at the other 4 boroughs.

Kevin,

I like your version of "unity". Quite excellent. Friends don't let friends buy at the top of the market!

I liken the #2's (as you put it) to the "24 Second Shot Clock" in NBA Basketball. Only in RE it's the "24 Month Clock". When you're bringing the ball up court with a "fresh shot clock" you see a lot of passing, head faking and positioning for a sure bucket. As the clock winds down you see frantic "Hail Mary" shots from a recovered loose ball at HALF COURT! (At this point your only hope is to try and get fouled) or in our case, get the FED to stop raising rates.

Right now the "Shot Clock" has 7 seconds remaining.