patrick.net

Or perhaps I’ve just had good luck.

Never underestimate luck.

There's not much we can do about our luck, but there's plenty we can do as financial transaction due diligence.

There’s not much we can do about our luck

Really? I thought luck can be changed. There are branches of knowledge in many cultures just to deal with this topic.

WTF? 300K per employee axed?

Many were managers. That is the total burdened expense, which is 2x - 3x per head, depending.

I find that trusting my gut has led me well.

That is a gift. Intuition and "luck" are closely related.

My intuition is not bad but I have a nasty habit of questioning it at the wrong time. I am probably going to buy a house at the peak and watch its value cut in half. :(

The majority of renters are people who want a decent place to live, affordable rent and on time repairs. But there is a small minority who are financial or emotionally unable to make good tenants. There is also a tiny minority who are basically scam artists who never intended to pay rent.

It's these bad tenants that you HAVE TO exclude. I've heard some fairly awful stories about bad tenants doing tens of thousands of dollars in damage and taking a huge amount of time to evict. You also have to be extra careful about renting to people with pets and small children. Some of these people are really unsanitary.

"Suggestions of the repeatable variety are requested."

Would "Hot Stud" be repeatable?

Or perhaps "The Studly Curmudgeon".

astrid,

Oh I'm sure the BA hasn't seen prices like that since AT LEAST 1990! What I found so very telling is we live in one of the few communities that has actually seen a solid influx of Californians. Granted on a much smaller scale than Bend, OR but b/c our scale was less grand (and the mania more subdued) it was widely thought that we wouldn't see much if any of a "correction" here!

Well I think this is one pretty glaring example that:

A. It's NOT special here.

B. It's still possible to "over build" even in smaller communities.

C. Just b/c you haven't seen as big of price run-ups in your neighborhood or area doesn't mean you're not going to take your turn in the barrel!

If Portland and Bend are 2nd tier markets, we don't even show up on the radar (yet we're seeing price reductions left and right). I just never thought "outposts" like us would get to participate in the downturn. I am most pleased.

Muggy,

Found that quote over at Ben's, along with some other gems: "Piling On More Proof The Housing Boom Is Over"

Comment by SouthOCRenter
2006-08-24 09:20:00

They arent making any more buyers.

Almost forgot about those hilarious "Bubblefucius" sayings from Rainman18 --definitely worth honorable mention:

Bubblefucius say:
Man who get risky loan sure to suffer broken ARM.

Bubblefucius say:
Condo flipping like swift kick in the scrotum. Both painfull and you left holding the bag.

Bubblefucius say:
Low-ball offer today look much higher tomorrow when you are on knees.

Bubblefucius say:
Housing comps like instant coffee; both good until the last drop.

SP,

Your colleague is lucky to work in a relatively weasel free environment. Some scam artists are very good at faking while some good people may seem sketchy on first appearance. It's always more pleasant if you can implicitly trust the person you do business with, but I doubt many landlords have that luxury.

Bubblefucius. I love it! :)

How about...

A single foreclosure is a tragedy; a thousand foreclosures is a statistic.

Harm,

Great pic!! You guys made me homesick X is just as I pictured. Love it great community. Question? Whre can one get one of those fb T-shirts? I'd like to spread the Patrick. net gospel down south. I'm an X Pait and will return when the bottom drops out.

doodler,

Clicking around I see quite a few reporting rents increasing. There also isn't enough consistent data to be sure that outliers and mistypes aren't seriously distorting some trend values.

I think the data there is self-reported? That is about the least reliable way to get data about anything.

I forget the actual stat, but something like 80% of people will rank themselves above-average drivers. 75% will report they "got an extremely good price" on a new car purchase. I doubt many people accurately report their rent prices on a site like that. A good rule of thumb is to add 10%-25% to what people report for prices where lower is better, and opposite where higher is better (people overstate what they paid for their wife's engagement ring, for example).

Sylvie,

If we get enough interest in them (any other takers?) I may ask Patrick about setting up a CafePress online storefront for Patrick.net shirts, hats, mugs, etc. If not, I can do it informally on a person by person basis. I won't have much time to do anything until October though, as I'm in the process of moving right now.

I won’t have much time to do anything until October though, as I’m in the process of moving right now.

Did you buy a house? :)

off topic....

What's up with zillow, I was checking out the increase in values of houses in the 94040 area and the prices seem to have doubled (or more) suddenly in Jan 05 - what am I missing?

Zillow's gone wacky. I have very low confidence in any of its estimations. The only useful thing there is the sales history.

speaking of crikey:

"As finance journalist, Michael Pascoe, wrote in crikey.com.au last week, “A Sydney Century 21 real estate agent has broken one of the golden rules of his profession: never admit there's anything wrong with the market as it's always a good time to buy.” The agent had confessed that “there’s absolutely nothing happening out there”.

Such honest comments are not welcome among the real estate crowd.

Suddenly, the painful truth of Sydney’s property market can no longer be denied, covered-up or buried under self-serving industry spin.

All the recent real estate cliché words – such as 'soft landing', 'correction', 'adjustment', 'plateauing', have been swamped, tsunami-style, with one truthful word – CRASH."

PROPERTY'S PAINFUL TRUTH

it could be the year of crikey...

It's almost all too late now, but this one is funny -- not sure if it's been used here before:

It’s what’s often referred to as ‘The Strawberry Box Principle’, in which a box of strawberries keeps being re-sold at ever increasing prices until one of the buyers looks in the box and says, “Hey, these strawberries are rotten.” The answer from the seller is: “Oh, these are not for eating, they're for selling.”

Randy H,

I'll have to agree. Zillow is all over the board. This may not be entirely their fault. Most markets are now very sloppy. Homes widely known to be in a bubble prone areas seem to be appreciating nicely? I have no idea if this platform can be salvaged.

SFWoman Says:
True sociopaths see nothing wrong with their actions, so they don’t give off that odd feeling (smell? tics, too quick a laugh? fleeting eye contact?) that people normal give off when they are lying. Their human-ness is missing.

unfortunately, they are often politicians, salesmen and management... maybe it's part of the human condition after all... :(

hmm, just to prove that i wasn't smoking peyote earlier re US consumer confidence (vs the 'CostCo was crowded today Indicator'):

"Meanwhile, in the main game, the bad news just keeps on building about the US housing industry. On top of massive oversupply, home sales there dropped last month to a two-year low. That is not unrelated to the University of Michigan's consumer confidence index diving to a 14-year low, excluding the September/October hurricane shock.

As Macquarie Bank economist Mark Tierney writes this morning, the dive in the homebuilder survey hints at a significant fall in US personal consumption and the consumer confidence downturn is being complicated by rising inflation expectations. It's become a messy and unattractive picture.

The bottom line is that if the consumer of last resort tightens his or her belt, the world will feel that housing crash."

The housing crash - no wonder Howard's hiding on interest rates

DinOR,

I'd like to say that some hardcore methods could be applied to clean up the data. (That said,) it's much easier said than done. My best guess is that they're using some reasonable techniques, but that they're getting hammered by the small data sets per estimation and large estimation errors.

I'd love to take a crack at trying to apply some nice neural network tech to that data, and see if a NN could be trained to produce nicely smoothed & inferred estimates. I doubt there's a business model which would sustain such an indulgence, though.

-20%...

Patrick.net on my racecar would look good

can't afford a sponsorship tho :( patrick.net is an inverse sponsor...

how about that .gif file of the bubble bath that was going around? that would be cool on a t-shirt...

"He is actually a very hard-headed, calculating sort of bloke - the only reason he trusted me was that he knew me very well. "

Hehe. Are you suggesting that your colleague is just a tinge weasly? (Unfortuately, I do not have your colleague's pleasing ability to flatter - my original statement was supposed to imply that you work at a nice place where people trust each other and I was not implying that you work in a place full of trusting rubes - though I guess working in the latter setting can also have its advantages.)

Bap33,

Yeah, those are pretty funny numbers. Maybe they discovered a layer of asbestos 2 feet below the surface or maybe somebody strip mined the land didn't bother to restore it.

(My best guess is that somebody along the way probably mischaracterized some transactional data.)

Astrid wrote:

> The majority of renters are people who want a
> decent place to live, affordable rent and on time
> repairs.

True

> But there is a small minority who are financial or
> emotionally unable to make good tenants.

It's not a "small" minority since the majority (well over half) of all renters are not "good tenants" and even with good screening I have problems with at least 20% of my tenants...

A 15 minute conversation can reveal much more than any screening.

Very true. Actually, one eye contact is telling enough.

It’s not a “small” minority since the majority (well over half) of all renters are not “good tenants” and even with good screening I have problems with at least 20% of my tenants…

hmm, all the more reason more affordable housing should be available for ownership, rather than exploiting people for rent, possibly for their whole lives... maybe if they had a chance at owning their own place they would look after it better...

poor landlords, always losing money :cry:

SQT,

LOL! I couldn't believe they didn't pull that one almost immediately! Very funny. Had the post been toned down in the least it could have passed for a "legitimate" post.

I'm sure we've all seen the pathetic "mercy posts" that pop up from time to time in virtually every market C/L covers. The only thing I would have added is that the vacation should have been some place wreckless (like Vegas) or exotic (like Fiji). We need to get that one across the board on C/L!

Mr. Harm

Thanks for info October would work. Would make good christmas gifts don't ya think? Keep me posted..

i understand option ARMs better now. people in oz take out 'ARMs' as a matter of course, but not with neg am or deferred interest payments -- it's just not common to fix, and you can only fix for 3-5 years before the banks review it anyhow, never for 30 years...

He said that the company that his brother works for has just put in place some tough rules for accepting sellers - basically the seller must be prepared to ‘work with them’, i.e. not be unrealistic in price expectation - or else they don’t list the property.

About time. :)

Refinancings. Anyone who can is getting out of ARMs/IOs/Options

firebolt,

Somone over at Ben's Blog did a great job sharing that exact same sentiment by following Andrew LePage. He now writes for the "Sac Bee" but wrote for the LA Times during the last down turn. I'm sure for journalists the reason they got into that field in the first place is to cover "ground breaking" stories! (For Andrew this had to feel like being told to "re-copy your homework").

Especially funny to note all of the cheerleaders comments were a mirror image of what's being fed to us today. Hang in there Andrew.

Check out www.foxnews.com for some real abuse! Click on the video links in the lower left hand of the home page under "Brutal Beating".

Someone over at Ben's brought it up and it is a glimpse into what a bursting RE bubble will look like. (Not for younger members of patrick's viewing audience).

"Historically, consumption led expansions do not have staying power"*

Steve Lehman, Federated Funds*

Gosh, do you think we could consider at least the last 5 years a "consumption led expansion"? Thanks for sharing that Steve.

"Spending your way out" of a recession has been tried before with dismal results.

In retrospect FB's should be grateful! They were shown their way into neighborhoods they otherwise may not even have driven through. Permitted to vacation at spots they'd seen on Robin Leach's Lifestyles of the Rich and Famous and drove some really neat cars/SUV's (for awhile).