patrick.net

Wkong,

>>It’s just too much money in this area,,,,,,

Not anymore, you must be living in a 1999 time-warp. And no, Tesla Motors filing for IPO is NOT going to change that.

high end market may be stabilizing..

http://sanjose.bizjournals.com/sanjose/stories/2010/01/25/daily82.html?surround=lfn

Austin....very well said. Thank you.

SFace & wkong...can't disagree with you, which frustrates me. The apparent reality of affluence in the BA, particularly the south BA is just something I (perhaps "we") need to deal with. Only time will tell whether the level of affluence will dwindle but for now it is where we are at. Gotta say, I grew up in the south BA and consider it my home. If I didn't have such deep roots, I would move in a nano-second. The competition for housing and cost of living is total BS and the techies can have it. Even with the deep roots, I wonder a lot whether getting out of here is the way to go.

For me in Portland, Oregon it's not about finding bottom or worrying about missing the train, it's about affordability. We already went down the route of buying too much house, went through lay-offs and career change and now we have two kiddos.

Unless we want an hour commute or to live in Felony Flats, we are very comfortable renting, comfortable missing the bottom...

Until we are past the diaper and $$childcare$$ stage we are content being 'loser' renters:O)

Austinhousingbubble,

>>See, this is more of the same. By creating mental imagery of some indecisive tightwad wringing his sweaty hands over the latest Case/Shiller numbers, you take the notion of defensive prudence and turn into a pejorative.

Applause for the elegant deconstruction of the Buy! Now! Housing Cheerleader Propaganda (TM).

Beautifully done. I don't have the patience myself to wade through all their long-winded claptrap .

Leigh,

That's right. It is all about affordability. And if you buy a house for a price that soon no-one else will be able to afford, you are setting yourself up for a loss later in time.

>>Remember, the program will end by April, first time buyers are in hurry.

What is that program again?

Save 8000, pay 16000 more than you otherwise would, then lose another 32000 when the prices fall again after april.

Sounds about right.

The 'program' is not just for 1st time home buyers. I think there is $6,500 in tax payer money waiting for others to purchase. But how much does that help in the Bay Area when you are lookin at such expensive housing?

Tomrisk says

Sorry, I just cannot say whatever you people want to hear.

You mean sort of like the front page of this site? :) I wish I could say only what people want to hear but I'm more interested in getting down to the truth.
So unfortunately I have to bring up some more bad news. There's also the folks who sold at the peak and have been renting ever since and sitting on a pile of cash. Not sure how many are in this category but anecdotally I know of at least one.
I feel this may be another factor driving high end sales at some point.

Most of the people I talk to who are looking to buy a house are pretty ignorant about historical Bay Area prices, cap rates, unemployment outlook or the whole situation with Option ARMs in the desirable areas. They only compare peak bubble prices to current prices and see this as a good opportunity to "get in before its too late".

people have pretty short memories and attention spans. They read a few headlines and talk to a few Realtors and are now convinced things are OK now. Just look at the stock market. Just because the desirable areas have not crashed yet, doesn't mean it won''t. I show people the rate reset chart and they gets this glazed over look in their eyes....

Tomrisk says

Sorry, I just cannot say whatever you people want to hear.
Recommendation:
Check with your lender, hear their side of the story and see what’s going on here in Bay Area.
Believe it or not, lots of transaction were done in cash, buyers were not even bother to go through the Bank.
Also, people have the pre-approval letter having a hard time to locate a house.
Remember, the program will end by April, first time buyers are in hurry.
Besides, Banks and Lenders try all means to keep the troubled house owners in the house rather than kick them out. Foreclosure properties flooding the R.E. market are not going to happen in Bay Area.
Fact is, in Bay Area, lots of people lost their jobs, about 10% to 20%, but the other 80% still making good money and 30% of them are waiting on the sideline.
Good luck house hunting.
Peace!

how does your lender know anything about cash transactions? Where is your data on all these people buying with cash? All these arguments have zero way for verification.
its like the mythical chinese immigrant buyer argument (or Russian/South American buyers in Miami etc)... lots of speculation and fantasy.

What happens when those programs expire and buyers are "not in a hurry" anymore?

I aint in a hurry ... Lord Barry can stuff that $8K in Barney Frank's behind.

Closer to truth numbers can be found here -

http://www.shadowstats.com/

Hi Everyone

I live in Danville, which is East of San Francisco and is not considered Silicon Valley. Homes early in January went pending very fast. Lots of homes came on the market in the last 2 weeks and did not go pending yet. Bernanke is pulling the plug in March so things are getting less rosy fast. Hang tight everyone, I think a slowdown is coming soon.

Watchdog: Bailouts created more risk in system(Edited for relevant too topic)
By DANIEL WAGNER and ALAN ZIBEL, AP Business Writers Daniel Wagner And Alan Zibel, Ap Business Writers 1 hr 18 mins ago

WASHINGTON – The government's response to the financial meltdown has made it more likely the United States will face a deeper crisis in the future, an independent watchdog at the Treasury Department warned.

The problems that led to the last crisis have not yet been addressed, and in some cases have grown worse, says Neil Barofsky, the special inspector general for the trouble asset relief program, or TARP. The quarterly report to Congress was released Sunday.

"Even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car," Barofsky wrote.

...
Much of Barofsky's report focused on the government's growing role in the housing market, which he said has increased the risk of another housing bubble.

Over the past year, the federal government has spent hundreds of billions propping up the housing market. About 90 percent of home loans are backed by government controlled entities, mainly Fannie Mae, Freddie Mac and the Federal Housing Administration.

The Federal Reserve is spending $1.25 trillion to hold down mortgage rates, and millions of homeowners have refinanced at lower rates.

"The government has stepped in where the private players have gone away," Barofsky said in an interview. "If we take government resources and replace that market without addressing the serious (underlying) concerns, there really is a risk of" artificially pushing up home prices in the coming years.

The report warned that these supports mean the government "has done more than simply support the mortgage market, in many ways it has become the mortgage market, with the taxpayer shouldering the risk that had once been borne by the private investor."

Barofsky's report echoed concerns raised by housing experts in recent months, as home sales and prices rebounded. They warn that the primary reason for the turnaround last year has been billions of dollars in federal spending to lower mortgage rates and prop up demand.

Once that spigot of cash is turned off, they caution, the market will be vulnerable to a dramatic turn for the worse. Daniel Alpert, managing partner of investment bank Westwood Capital, wrote in a report that national home prices are bound to fall 8 to 10 percent below the lows of last spring.

"The lion's share of the remaining decline will occur in markets that saw sizable bubbles but have not yet retrenched," he wrote.

Officials from the Obama administration counter that massive federal intervention has helped the housing market stabilize and prevented more dire consequences.

Barofsky's report also disclosed that, while the Obama administration has pledged to spend $75 billion to prevent foreclosures, only a tiny fraction — just over $15 million — has been spent so far. Under the Making Home Affordable program, only about 66,500 borrowers, or 7 percent of those who signed up, had completed the process as of December.

He said the key to preventing future crises is to reform Fannie Mae and Freddie Mac, create and improve loan underwriting and supervision of banks. He stopped short of endorsing specific proposals for overhauling financial regulation, but said many of the proposals would go far to improving the system.

Once that spigot of cash is turned off, they caution, the market will be vulnerable to a dramatic turn for the worse.

The thing to keep in mind is that spigot is stuck in the on position, and they will not cut the cash flow if there is even a remote threat to the "housing recovery."

Austinhousingbubble says

The thing to keep in mind is that spigot is stuck in the on position, and they will not cut the cash flow if there is even a remote threat to the “housing recovery.”

They can only keep this spigot on so long as they can keep issuing T-Bills at low interest rates. If the overseas buyers dry up, rates WILL go up. The spigot may stay full of funds, but they'll come at a higher interest rate.

They can only keep this spigot on so long as they can keep issuing T-Bills at low interest rates.

I suspect there will be any number of gimmicks deployed to gig the market that we haven't thought of in order to keep houses moving at puffed up prices; perhaps community service in lieu of down payments, etc. In any event, I fear the bubble is back and is here to stay for a long time.

kentm says

wkong, do you own?

I wish I did. Pocket is shy....