patrick.net

So there's a house down the road that just sold over asking for $1,215,000, asking 1,198,000 listed on June 28th, sold July 11th - sounds bad for us until I tell you that it was originally listed April 13th for 1,358,000 - or at least that's when I first came across it.

Still not good for me as I can't afford that kind of price, but I can afford to rent :-)

DinOR,
Thanks for the inspiring Karaoke image - maybe you could follow it up with a rendition of "End of the World as We Know It" (REM).!

Here's a question I pose to everyone: it seems the general consensus is that the Fed SHOULD raise rates to combat inflation, but it probably won't because of political pressures. What happens if it doesn't, and even drops rates? Of course the obvious answer is rampant inflation, but what I'm wondering is what about down the road? How long will the average FB, Congress, the next President tolerate runaway inflation? Look what happened to Carter, for example.

I’m ashamed to call myself a conservative anymore. The fiscal policies of this administration and Republican Congress have been nothing short of shameful.

I still consider myself conservative (fiscally, at least). The current Republican administration is not fiscally conservative at all, so you shouldn't be ashamed of calling yourself conservative.

George,

From the excellent Volcker article you linked,

A wise observer of the economic scene once commented that "what can be left to later, usually is -- and then, alas, it's too late." I don't want to let that stand as the epitaph of what has been an unparalleled period of success for the American economy and of enormous potential for the world at large.

Sadly, this is exactly what the Fed and the current administration appear to be doing right now.

Randy H,

Just a thought on lowball offers. Why can't we just take out an ad or even use C/L and simply say;

Wanted: Reasonably priced home in the 92XXX zip code. Prefer 4 bd. 2 1/2 bath on larger lot. Older home o.k. Potential buyer is qualified to XXX,XXX. Please call (415) 555-5555.

and just see what happens? Or just use your trash e-mail and only call back the ones that are mostly sober. I'm sure you'd get some real winners responding but you only need ONE, right?

BayBear, excellent analysis.

1. Get a new, temporary phone number - like a disposable prepay cell phone. Also, a temporary Hotmail address wouldn’t hurt.

I know, I know - this is just plain cruel. So if you do this, please choose deserving targets :-)

Better yet, go to the open house wearing some really expensive clothing. Eat their food, drink, light up a nice thick smelly cigar (they probably won't stop you because you look like you are a potential sheep who has money), when you have the place just about clouded with smoke, offer them (with a straight face) 50% of the asking price and ONLY if they throw in a new BMW and a years supply of gas. Sometimes I have evil thoughts :twisted:

The first time I heard about alligators referring to housing.

I don't believe Kiosaki was the first one to use the term, but it's certainly come back into vogue in recent months (for obvious reasons) and is bound to get even more popular. Here's a good fresh post on the subject over at Mish's:

http://globaleconomicanalysis.blogspot.com/2006/08/beware-of-alligators.html

I don’t believe Kiosaki was the first one to use the term,

Who was it then?

I don’t believe Kiosaki was the first one to use the term,

Who was it then?

Though it pains me to give a shameless, self-promoting confabulator like Kiyosaki any credit, I suppose he could be credited with popularizing the "equity alligator" term. It would not surprise me, though, if it goes back years or decades --even possibly to the previous Florida real estate bubble of the 1920s. If I had an membership to the online O.E.D. or access to a good etymologist, I could probably find out.

You don't like kiyosaki? I find his articles very interesting to read.

allah,

Kiyosaki may be a very entertaining speaker/writer, but then again so are a lot of slick, dishonest hucksters, which is what he appears to be (Different Sean or ajh might prefer the term "spruiker"). I recommend reading John T. Reed's excellent expose of Rich Dad Poor Dad to see how Kiyosaki bends and distorts the truth --or just plain makes shit up-- to sell books and seminars, all the while claiming he made his fortune by being a brilliant investor (not likely).

http://www.johntreed.com/Kiyosaki.html

That's just one persons opinion. Writers do this sometimes criticise other writters to help them promote their own material. I always take peoples opinions with a grain of salt. He may have some skeletons in the closet, but so does everyone else. I have never read his book "Rich Dad Poor Dad" so I cannot make any judgments myself; but as far as the articles he writes, I found them logical, truthful and entertaining as well.

Kevin Says:

Kevin wrote:

> Let’s try this: 1. Get a new, temporary phone number -
> like a disposable prepay cell phone. Also, a temporary
> Hotmail address wouldn’t hurt.
> 2. Go to as many open houses as you can.

I have a friend that always uses (415) 267-6999 when he needs a fake phone number...

allah,

If you have found value in what RK has written and put it to good use, then more power to you. I can't claim to be an expert in Kiyosaki debunking nor have I bought his books or boardgame. Even so, the degree of fact-fudging and vagueness about his past, as well as the questionable "sources" he used for RD/PD raises some red flags for me.

No one is bias free or correct 100% of the time, this is true. Even so, I find his casual willingness to blur the line between fact and fiction a bit a bit too James Frey-esque for my taste. His whole operation smells strongly of "get rich quick/motivational speaker", or as Reed puts it, a "cult of personality".

I have a friend that always uses (415) 267-6999 when he needs a fake phone number…

I think the person wanted to get call backs to continue messing with the person.

For that, just sign up for a SkypeIn account - it's like $36 or something for a few months. I have one so that I can have a 646 number and pretend I'm living in Manhattan. :)

You’d think that the Astroturf people would have marketed a new brand - something longer, lusher and greener than the stuff that they sell for sports - specifically designed to cover the average 5,000 ft lot.

The Ortho-Toro-Scotts industrial complex probably would crush them. :(

DinOR,

Wanted: Reasonably priced home in the 92XXX zip code. Prefer 4 bd. 2 1/2 bath on larger lot. Older home o.k. Potential buyer is qualified to XXX,XXX. Please call (415) 555-5555.

That's not a bad idea. I don't know what kind of quality you'd get; probably pretty low. And the sellers you want to reach -- the equity rich probably older seller -- isn't going to be scouting CL for houses wanted ads. But maybe someone would see the ad and tell them about it? Longshot, but maybe worth it with a Skype # or some other disposable phone w/ voicemail.

BayBear,

I do agree with most of the HFers opinions about the Fed's likely actions. I will point out that truly believing oneself immeasurably smarter than the entire Fed is a pre-requisite of being a Hedge Fund Manager.

I heard a BGI global macro fund manager once proclaim that he was able to consistently outflank every major world Central Bank. Not that I doubt BGI's global macro performance, but it may not be 100% pure alpha genius either. It could just as well be that we've been coming through an extended period of arbitragable central bank policy. I'll be curious to see how well these guys do once trade barriers start rearing their ugly heads again.

And if we are on the precipice of another global depression and endemic deflation then I'll go on record as predicting that the Hedge Funds will be the first casualty. Those that don't go under in their positions will be seized, confiscated, frozen or regulated out of existence in very short order. They are the perfect scapegoat for any meltdown. Just read the FT any day to see how much global suspicion there is for these guys.

I can't stand that term "leveled off"; I guess according to a realtwhore, prices either increase or level off. The only two possibilities.

Then you hear, "we are going into a more normal market".

When will this denial end? How high does the inventory have to go?

As soon as I see stuff like this in an article, I lose my interest in reading the rest of it!

I will point out that truly believing oneself immeasurably smarter than the entire Fed is a pre-requisite of being a Hedge Fund Manager.

Then my cats can run hedge funds. :)

LILLL Says:

In la la land we just spaypaint the brown grass green!
I’ve actually seen this done!

Now that's just plain wrong!

In the use and application of the term "alligator" I've heard this typically applied to all types of assets you wish you could lease instead of having to own.

Say for instance a guy that owns an auto body shop? I'm told today's alignment machines can run into 100K or more. For people at this level it's a HUGE outlay of capital. If he were able to lease it instead this would be a more modest monthly expense and for the $50 a pop he can charge he can at least break even on a monthly basis. If he has to purchase it outright, he has to recoup the expense through the depreciation schedule. Hence the term alligator.

Well, when is a gator NOT hungry? He requires constant "feeding" and not a day goes by when we don't wonder why we aquired him in the first place!

I have personally heard the term's use since the 1960's and given that alligators are not indigenous to Chicago I'll side w/HARM's version of southern origins.

DinOR Says:

"...FB’s have taken a sudden interest in numbers. And they’re not good. Even the guy that’s not exactly “the sharpest tool in the shed” has figured out that all the fancy pants “shuckin’ n jivin” financial maneuvering won’t save his a$$ now!"
_____

More preciousness!

Randy H,

Oh I agree. This is basically a long shot type proposal, but that is the nature of bottom feeding. While most in the mainstream steer clear bottom feeders actively seek out "dark alleys"!

I'm all about brainstorming ways to "accelerate" the crash and find analysis (however accurate) trending toward a market bottom in say 2010-2012 beyond depressing. Seriously. I don't have that kind of time. 2012? You're kidding right? If we haven't come up with a solution to be in a respectable RE equity position until 2012? we've failed. 6 years from now even those among us with the most modest of resources should be sh1tting in tall cotton!

(It's the reason I come back here damn near everyday)! Oh, that and the humor and the Surfer X perma bull body slamming!

Conor,

Global macros require a bit more thinking than that. (If it were that easy...) But you already know this. You just don't like the Fed.

DinOR,

Acceleration is what it's all about for us. I'm guessing by late 07 I'll be evaluating whether to engineer some long-term lease agreement or buy in at a premium. From the stickiness I'm seeing here in South Marin, it'll probably be the former, sadly.

A friend of mine (a VC) has a wife who's been flipping McMansions for the past 3 years as a "hobby". She's stuck now with two listings and a third coming on in September (think Strawberry neighborhood). The first 2 aren't selling at asking, so she's renting them out instead. Seems they found a renter in 3 days for one at $6200/mo which is cflo positive.

I was hoping to see these types of homes being marked down, not converting to overpriced rentals. Although I don't want to buy a McMansion, I think this is an example of a segment of flippers that aren't going to go belly up like we often imagine here. These are the "keeping my spouse busy" flippers who could probably afford to buy out all their inventory in cash if they needed to.

Depressing.

Randy H,

I know, I KNOW! Extremely tough in the BA. There's more than enough "softness" to go around but it's been difficult to make any headway in your area.

The way I would approach a situation as you describe with your VC buddy's wife is to say;

"Look, I'm not here to tell you how to run your business but let's look at this from a pure business perspective". O.K? Yeah, true your showing a very modest positive cash flow but when you look at your ROIC (then factor in inflation and devaluation of the dollar) it's actually a negative return. Wouldn't it make more sense to "harvest" the tax loss and redeploy that liquidity into something more profitable?

Granted, that's a little brazen but who knows? She might bight at it? It's what I call "the drip process". Kind of like Chineese water torture. Every time you see her, drip drip drip.

I think this is an example of a segment of flippers that aren’t going to go belly up like we often imagine here. These are the “keeping my spouse busy” flippers who could probably afford to buy out all their inventory in cash if they needed to.

When(not if) the recession hits, people will lose jobs and money will be tight. When people have no income (or less income), they fall behind on their rent (especially when it's $6200/mo) and shit happens. We are only experiencing part of the "perfect storm", you seem to have left out the most important factor, the recession (or maybe even depression).

Just saw a segement on Kron4 about the housing bubble - their take on sales being 25% down, it's been expected nothing to worry about - and the presenter concludes - don't panic, just be patient to sell your house, or maybe buy a house and get in on it, you know?

I actually thought they were going to say that it had burst from the trailers. Boy am I disappointed in them.

kiyosaki wrote about a 'track of houses' in RDPD, when he meant a tract. interesting.

allah,

"a segment of flippers"

I think Randy H made an important distinction there. However, I am totally with you as to the fate of the other 99.999% of the flippers out there. Seems like you can't swing a dead cat over on C/L without hitting a "Lease to Own" offering and I've got to tell you here in OR they are becoming legion! You can always tell the "newbies" b/c they advertise to people with "bruised credit" and yet think that this individual will somehow have the 10 or 12 or 30K "down" to cure their self inflicted arrears! Funny! Sometimes I respond to these guys and they're absolutely clueless. It's like; "this HAS to work". Ahem, no, no it doesn't. Not the way you're going about it.

Let's see, come in with MORE DOWN than 99% of "homeowners", pay ABOVE market rental rates AND you're going to "lock in" TODAY'S price for me? Such a deal! Did you need me to give you a hand splitting and stacking your fire wood?

Then 3 weeks later you see it listed as "MUST SELL". Whatever dude.

Maybe he gets his assistant to transcript the articles, and they misheard him?

yeah, and nothing gets proofread, and his 'assistant' knows nothing about property... that's why his books are full of simple misheard bloopers of common real estate terms... happens a lot in book publishing... altho kiyosaki wasn't making much money to pay an assistant before writing the books, now i think of it... he WAS involved in amway and scientology tho...

looks like the Oz Fed will raise interest rates a few more times soon to head off inflation from oil price rises...

Brace yourselves, warns Costello

Off topic:

OMFG - taken from a thread at the SDCIA message board. I'm not a member, so can't riposte there, but I thought you might enjoy a "funny" this morning..

STAGING FAQ'S...
My house isn’t worth being “professionally staged”…

OK, I can just about stomach the first few points, but this one really takes the biscuit.
YES - homebuyers CAN visualise past your nasty glass furniture! In fact, don't put it there in the first place! I'll only have to move it (and possibly break it, don't I wish...) while I'm busy measuring up, tapping walls, looking at flooring and generally checking the place out.
What kind of fool wouldn't bring thier own tapemeasure when viewing a house?

Someone on the thread proudly pointed out that they spent something like $6K to have thier house 'staged'.
Why - in the name of all that's holy - why not just reduce the price by $6K and let the buyers figure it out for themselves?

It appears that, indeed, I AM a child that needs leading by the left nostril while viewing a house, just in case I miss the fabulous glass coffee table - which hopefully won't be there when I actually take possession of the place.

OK, rant over. Normal service is resumed.

SmartMoney magazine (Karma Chameleon by Eleanor Laise, February 2003, pages 97-103) provides the best summary of Kiyosaki's deceptions regarding Rich Dad.

When questioned by Laise, Kiyosaki gave this string of answers regarding Rich Dad's existence.

1. "Rich Dad passed away at around the same time as his biological father -- in 1992."

2. "Two weeks later...Kiyosaki [claims] Rich Dad...is very much alive -- he's just a reclusive invalid."

3. Later when asked again, Kiyosaki "insists there was an original Rich Dad, but he admits that the character in the books is actually a 'composite' of seven different mentors..."

4. When pressed further, "Kiyosaki finally loses his cool. 'Is Harry Potter real?' he demands. 'Why don't you let Rich Dad be a myth, like Harry Potter? The real issue is, am I credible?'"

No, Mr. Kiyosaki, you are not credible. A man or woman is only credible by telling the truth. Liars are not credible.

Kiyosaki's Imagination: "Sometimes I even start the company and take it public [i.e., an "initial public offering" or IPO]." (page 90)

In Reality: SmartMoney was only able to get the name of one such company from Kiyosaki, "Yamana Resources [now Yamana Gold, Inc.], a gold exploration company that trades on the Toronto Stock Exchange. And if he had anything to do with Yamana's IPO, that comes as a surprise to the company's founder and CEO, Victor Bradley. Kiyosaki's only connection is that he owned shares of Platero Resources, a privately held mining exploration company that Yamana bought in 2001 -- six years after Yamana went public."

etc...
Problem #4 - Kiyosaki's Many Other Fabrications
that's 2 guys and 2 finance magazines and a failure to verify any of kiyosaki's claims now...

The NAR has published their Q2 existing home sales volume data:

http://www.realtor.org/PublicAffairsWeb.nsf/Pages/2ndQtrStateResales06?OpenDocument

as well as the Q2 2006 Metro-Area existing home sales data:

http://www.realtor.org/PublicAffairsWeb.nsf/Pages/2ndQtrMetros06?OpenDocument

Check out the linked tables too. Some tidbits: CA 2006 Q2 sales volume is down YoY -25% (no surprise there), and the fun fact the NAR spin-blurbs fail to mention is that YoY prices in many areas are flat or negative. SJ area is "up" 0.4% and SF area is up 3.4% YoY. Last I checked, neither of these numbers beats inflation. In fact, the national median home price is only up 3.7%, which is a close call with inflation, depending on which "real" inflation number you believe.

Interestingly, the areas that still have double digit price appreciation are areas that are later into the bubble game like Portland, Spokane (sorry MA and DinOR), VA Beach, SLC, and oddly enough, lots of FLA (sorry George). If the current pattern continues, it looks like Learah's "rolling boom" will become a "rolling bust" too.

Hey, can someone get my post out of moderation? I'm guessing it's the multiple links???