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From Hi-Fi to Wi-Fi to Re-Fi

By Peter P follow Peter P   2006 Sep 18, 2:43pm 9,437 views   196 comments   watch   nsfw   quote   share    

What have we achieved in the past 25 years? What have we learned?

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157   FormerAptBroker   ignore (0)   2006 Sep 20, 5:39am     ↓ dislike (0)   quote   flag        

randomguy Says:

> I was very close to buying a condo in San Jose 6 months
> ago for $515K. I only make $75K a year…

Only 6 years ago you could buy a nice big home near downtown Mill Valley or in Burlingame Hills for $515K (and the average buyers made around $175K a year)…

> It came down to the last day where I was supposed to e-mail
> the condo guy and tell him if I wanted it or not. I got scared
> I decided against buying the place. I think this blog saved me
> what would have been a lot of buyer’s remorse and financial
> hardship.

The guy who bought the condo probably makes $60K a year and probably bought the place with no money down using a neg. am IO first and a 2nd. Odds are that he will soon have two mortgage payments and HOA dues that are more than his take home pay…

158   astrid   ignore (0)   2006 Sep 20, 5:42am     ↓ dislike (0)   quote   flag        


Oops, my bad. I heard city affordability numbers bandied about in the single digits, so I figure 80+% would be safe.

159   DinOR   ignore (0)   2006 Sep 20, 5:52am     ↓ dislike (0)   quote   flag        


Oh, no arguing here! And that "princely return" also assumes you collect the rent your damn self! When one factors in inflation and the devaluation of the Yankee dollar it's probably a negative number. Like I always say, "I don't have to slide down a bannister full of razor blades to know that will hurt"!

161   FormerAptBroker   ignore (0)   2006 Sep 20, 5:59am     ↓ dislike (0)   quote   flag        

austingal Says:

> There are some duplexes near us.
> Pretty nice, big yards, good schools.
> They are listed between 350-450k.
> Taxes are 6-7k a year. They rent for 1100/month.
> Now, am I missing something. Is there anyway
> that this type of property could be a good investment?

It does not sound like a good “investment” (since you will probably not get much of an actual return on your “investment”. If a $400K place has Gross Rents of $26,400 it has a GRM (Gross Rent Multiplier) of 15.15x about 50% above the historical average for homes and duplexes of ~10x (for apartments that average is ~8x).

A good rule of thumb for expenses (and a cap X) are $4K a unit + Property taxes so if we have Gross rents of $26,400 we will be lucky to actually collect 95% of that after vacancy & collection loss. If we subtract $14.5K in expenses from an EGI of $25,080 we get a NOI of $10,580 or a 2.6% Cap rate about 1/3 of the historical average for homes and duplexes (for apartments the average cap rate is a little higher just under 10%)

163   astrid   ignore (0)   2006 Sep 20, 6:05am     ↓ dislike (0)   quote   flag        


Maybe you're right. I've always gotten advice to dress as expensively and as conservatively as possible for interviews and by that criteria, SFWoman's choices were impeccable.

Though I'd gone through a couple wedding registries of friends who work as scientist or scientist types. They seem to know brand names quite well or married someone who did.

164   DinOR   ignore (0)   2006 Sep 20, 6:07am     ↓ dislike (0)   quote   flag        


Thanks! I just wanted to show all the lurking doubters that we here at take this business seriously! (Although taken from market peak in Aug. 2005) you get the idea. Do you suppose it's gotten any better over the last year?

165   astrid   ignore (0)   2006 Sep 20, 6:08am     ↓ dislike (0)   quote   flag        


I guess it was 80+% after all at 16%, though their methodology is a bit different from what described.

Should I do an astrid called it victory dance around my chair?

166   DinOR   ignore (0)   2006 Sep 20, 6:11am     ↓ dislike (0)   quote   flag        


Uh...... you MAY!

I recall seeing an article on that said 78%?

I also saw I pop-up there that said I could get a 600K loan for $1,278.12 a month too though!

167   DinOR   ignore (0)   2006 Sep 20, 6:13am     ↓ dislike (0)   quote   flag        


So right!

I think I ripped that off from the old joke about the Dr. that upon leaving the morgue says "Call me if the patients condition gets worse"!

168   astrid   ignore (0)   2006 Sep 20, 6:17am     ↓ dislike (0)   quote   flag        


I was guestimating while you actually bothered to source your evidence. The kudos go to you.

Mainly, I was looking for an opening to introduce the word "truthiness" to this blog. I think we'll find it very useful in describing FB behavior.

169   HARM   ignore (0)   2006 Sep 20, 6:17am     ↓ dislike (0)   quote   flag        


Let's not forget that the "official" CAR reported housing affordability index bottomed out at 14% statewide, before they, uh, stopped reporting that stat.

The HAI conveniently went on "hiatus" for 8 months, just as median prices and interest rates continued to climb (which would indicate it probably dipped into single digits during this time), and even after they seriously re-jiggered the index, the best they could produce was an amazing 23%!

See Lies, Damned Lies, and the C.A.R.

170   DinOR   ignore (0)   2006 Sep 20, 6:30am     ↓ dislike (0)   quote   flag        

Have you seen my damn HAI? I know it was around just a little while ago? Well.....anyway it was old, out dated, antiquated, busted, disgusted (and not to be trusted)!

WTF! I want everyone to get up and do a little *astrid victory dance around their chair right now!

Yeah you too alien!

171   Claire   ignore (0)   2006 Sep 20, 6:43am     ↓ dislike (0)   quote   flag        

I think they are installing a new server or something and it is taking a bit longer than expected?

172   Claire   ignore (0)   2006 Sep 20, 6:44am     ↓ dislike (0)   quote   flag        

Okay so if they bail out the FB's I guess that we become F'ed instead?

173   lunarpark   ignore (0)   2006 Sep 20, 7:35am     ↓ dislike (0)   quote   flag        


Nice catch re the Merc article. So far the dq news report has not made it to the front page at I'm waiting to see what they publish.

174   HARM   ignore (0)   2006 Sep 20, 8:01am     ↓ dislike (0)   quote   flag        

Ben’s blog is back up.

Not quite. The main page is there, but no content. But at least we know he's "working on it".

175   astrid   ignore (0)   2006 Sep 20, 9:01am     ↓ dislike (0)   quote   flag        


I guess that's the value in a Kelly or a Birkin bag. Hellaciously expensive but timeless.

176   StuckInBA   ignore (0)   2006 Sep 20, 9:06am     ↓ dislike (0)   quote   flag        

I am not sure how the bailout can actually happen. Has anything this massive ever been bailed out ? LTCM is nothing compared to the bubble we have.

After none of the stock market crashes, were the investors bailed out. I don't even even think it's practically possible.

On the other hand lowering rates or ZIRP is not out of the realms of possibility. What effect it might have is an interesting debate and we did that many weeks ago.

But bailout ? That's being paranoid.

177   Peter P   ignore (0)   2006 Sep 20, 9:19am     ↓ dislike (0)   quote   flag        

The only LV bag I have isn’t really LV but a knockoff my Mom got in Thailand. I wouldn’t buy it myself, but hey, I’ll take a cheap bag as a gift. I know women who’ve paid $250 for a knockoff. Silly for a purse.

LV bags are quite well-made though. I personally like them.

178   skibum   ignore (0)   2006 Sep 20, 9:20am     ↓ dislike (0)   quote   flag        

RE: bailouts for this mess, I predict the target for a Fed bailout will be the mortgage/MBS/credit industry. After all, this is as much a credit bubble as it is a housing bubble. The FB's who default or "short" sell? They walk away with bad credit ratings. The ones holding the bag are the suckers who bought these MBS products from the issuers who bought them (eventually) from the loan originators, who in turn sold them off asap to get rid of them and pocket a profit. Hedge funds (and a surprising number of mutual funds), Fannie Mae and Freddie Mac will be the poster children of this mess, just like LTCM was and the Keating 6 (or however many of them there were) before them.

179   skibum   ignore (0)   2006 Sep 20, 9:33am     ↓ dislike (0)   quote   flag        

CB Says:

“These bags are really easy to be taken care of, it’s made of PVC and you can just wipe it with a damp cloth”. PVC, maybe he became a RW and made lots of money since.

That way, when Paris Hilton pukes from drinking too much, or worse yet gets someone (else's) bodily fluids all over the bag, it's easy to clean!

180   astrid   ignore (0)   2006 Sep 20, 9:40am     ↓ dislike (0)   quote   flag        

"“These bags are really easy to be taken care of, it’s made of PVC and you can just wipe it with a damp cloth”. PVC, maybe he became a RW and made lots of money since."

That's where truthiness kicks in. It doesn't matter if the Burberry bag is exactly the same as a knockoff at 1/20th the price, as long as your gut tells you it's valuable.

181   HARM   ignore (0)   2006 Sep 20, 9:46am     ↓ dislike (0)   quote   flag        

Ben's blog is back --for real this time. Content and everything:

182   Peter P   ignore (0)   2006 Sep 20, 9:53am     ↓ dislike (0)   quote   flag        

My hybrid is my first new car. My other car I bought two years old in ‘94 and still have.

Lexus' hybrids are top notch. However, I still do not see a reason to get one yet.

183   requiem   ignore (0)   2006 Sep 20, 9:54am     ↓ dislike (0)   quote   flag        

PVC!? I *heart* my Tumi bag, but it's made out of a semi-durable material. (Counts back... it's been 10 years since I got it, and none-the-worse for wear.)

184   Peter P   ignore (0)   2006 Sep 20, 9:56am     ↓ dislike (0)   quote   flag        

They are asking $842/square foot for an apartment that is uglier than any college dorm I have ever lived in.

Who needs such a huge laundry room? Why do they have multiple machines in such a small apartment? Is this about the 2x of everything again?

185   Peter P   ignore (0)   2006 Sep 20, 9:57am     ↓ dislike (0)   quote   flag        

He gave it to me as a gift (an odd gift for someone who never washes or cleans her car).

Don't worry. Lexus gives you a free wash everytime you bring it in. :)

186   Peter P   ignore (0)   2006 Sep 20, 10:01am     ↓ dislike (0)   quote   flag        

It is one of those apartment building laundromats.

Huh? 8-O

This apartment at The Brannan costs less than $800/sqft:

Why would anyone want an apartment with communal laundry at that price?

187   skibum   ignore (0)   2006 Sep 20, 10:01am     ↓ dislike (0)   quote   flag        

SFWoman Says:

They are asking $842/square foot for an apartment that is uglier than any college dorm I have ever lived in.

I enjoyed looking at the turquoise-colored bathtub.

I guess they *can* say the the kitchen has a stainless steel appliance.

188   Peter P   ignore (0)   2006 Sep 20, 10:08am     ↓ dislike (0)   quote   flag        

New thread: Brave New Market Revisited

189   astrid   ignore (0)   2006 Sep 20, 11:04am     ↓ dislike (0)   quote   flag        


That realtor should have stuck to one picture (of the street). The more I see, the less appealing it looks.

190   OO   ignore (0)   2006 Sep 20, 11:31am     ↓ dislike (0)   quote   flag        

I consider any parts of my body expensive realty, why would I pay $$$ to put other logos on my body? Shouldn't the manufacturers pay ME to put their logos on my body parts?

I will carry a LV briefcase with the frigging LV motif all over it if LV pays me $100 a day for carrying it around, not too much to ask for, right?

191   skibum   ignore (0)   2006 Sep 20, 12:27pm     ↓ dislike (0)   quote   flag        

OO Says:

I consider any parts of my body expensive realty, why would I pay $$$ to put other logos on my body? Shouldn’t the manufacturers pay ME to put their logos on my body parts?

You mean, like this?

192   speedingpullet   ignore (0)   2006 Sep 20, 12:32pm     ↓ dislike (0)   quote   flag        


...ah yes, the chav of the things I really don't miss about living in London any more.

The worst culprits for 'logo on everything' seem to be the cheaper stores like Old Navy or A&F. Its next to impossible to get a T-Shirt there that doesn't have thier logo blazoned across the entire front. Why pay good money for advertising when your shoppers can do it for you by wearing your clothes?

193   Different Sean   ignore (0)   2006 Sep 20, 3:52pm     ↓ dislike (0)   quote   flag        

exotic mortgages may have been around 'forever' (well, since the 80s), but the use to which they are now being put is incorrect and dangerous. option ARMs were originally created for cashed up investors at the high end who wanted to increase their deductions later in the life of a loan by deferring interest payments, or for other reasons. they were never intended as an ordinary mortgage vehicle for people who have been told their property is guaranteed to appreciate at 7-10% a year forever, so just hold on and wait. people are then mortgaged at the absolute limit of what they can bear just paying artificially low interest, on low-doc loans given to them by unscrupulous or thoughtless brokers and lenders.

similarly, interest only (I/O) loans were designed for knowledgeable investors to maximise their returns in the immediate present by increasing the tax deduction component of their investment.

this kind of half-baked, ungrounded guff where you blame the victim who is only trying to buy a place in an overheated market, aided and abetted by unscrupulous brokers and lenders, is not very helpful. why would borrowers select an option ARM or I/O loan if it is inappropriate for them? surely the advice of their lender would also be that it is inappropriate and they would refuse to make the loan, if they were acting prudentially? people seem to have no problem being granted these loans, or having them pushed on them, as a 'solution' to housing unaffordability which has been spiralling beyond their control.

194   salk   ignore (0)   2006 Sep 21, 7:59am     ↓ dislike (0)   quote   flag        

Chav culture? Rooney! Rooney! Rooney!

195   astrid   ignore (0)   2006 Sep 21, 8:15am     ↓ dislike (0)   quote   flag        

"Victoria v K Moss? She did snag Becks……"

It must be voodoo or a part of Beckham's deal with the devil. That woman is seriously scary and not human.

196   salk   ignore (0)   2006 Sep 21, 8:46am     ↓ dislike (0)   quote   flag        

Vegas? Had a great time there so i decided to go condo hunting on/near the strip. 600k for a 300 sq foot "studio". "Shaq bought one!" No thanks. Turnberry million plus; bus loads of specuvestors pouring into sales trailor. No thanks. Homes in Summerlin(?). 5-6 bedrooms 900k+ never lived-in lining the streets. streets abandoned except for tattooed skateboard pickup truck types. Streets lined with for sale signs one next to another. Realtor:They are all invested in newer 1.5-2 mil homes in other developments.. great opportunity...make an can rent it for at least 2000/mo...I will clean it for you... drive you to the airport...a man of your status must have a house here... you must drive a 760i...never find an opportunity like this. The clincher? My LA friend: "Vegas is passe."No deal. Mortgage broker fresh off the boat from Bosnia: "I bought ahouse for 450k and sold it next day for 475k. It is crazy. You buy a house , extract equity, and put it in our "Money Manager System". Barely out of community college and she wants to manage 900k. Really?

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