patrick.net

skibum

I unlocked it.

Suddenly, I am not bother by "trolls" anymore.

Perhaps I am confident.
Perhaps I now prefer a soft-landing (if at all possible)
Perhaps I am just indifferent.

However, if more people object I am willing to take actions.

Randy H,
Thanks for unlocking. Looks like we're pummelling mr. nusbaum-troll pretty hard.

Now back to your comments about women professionals, believe it or not, nationally speaking, both medical schools and law schools have greater than 50% enrollment of women.

Randy,

Thanks for that very interesting observation. I've never quite thought of that angle. Many of the women I've meet may seem to be uncomfortable or indifferent with their jobs because they perceive themselves to be working in male dominated fields or due to the persistence of a glass ceiling.

I hope you don't think I'm dissing women in general. I've received pretty decent mentoring from men offline and I've gotten great advice from some of the women on this blog.

"Now back to your comments about women professionals, believe it or not, nationally speaking, both medical schools and law schools have greater than 50% enrollment of women."

Yeah, but the men still seem to be in power. Even in law school. A lot of the women are very smart and study very hard, but it seems to me that the guys there have the best time there. (There's a couple great exceptions to the rule. One woman was a middle aged former TV executive - she was brillant and funny and obviously enjoyed trading barbs with the professors).

dang!! hate when I do that. Ruins the whole thing.

the google toolbar has a spell checker in it for webforms, and there's a few other plugins out there - e.g. iespell - including one for Firefox called Spellbound.. but beware:

Eye halve a spelling checker
It came with my pea sea
It plainly marks four my revue
Miss steaks eye kin knot sea.

then you need grammar checking -- that'll cost ya extra...

Prices are "levelling off". So -ve amortization people are in trouble from now on.

Inventory is still high. Wasn't it supposed to start go down at this time of year ?

Sales are off a cliff.

California foreclosure activity is now at 3 year high and continuing upwards.

More and more ARMS will reset as time passes.

So more homes, more desperation on seller's part and no urgency on buyer's part. Hmmm ... what will that do to the price ?

I don't know. I don't know. Hmmm ? I really cannot deduce anything from this. Oh ... wait. I get it. Now I get it. Indicators are market distress are largely absent. I think prices will start shooting upwards after this temporary dip. It has to happen that way. There has never been a period of -ve YOY median change since 2003. So if past is any indication, we will be cruising along just fine from tomorrow.

2 years ago I was looking at a new house by Centex, the CTX mortgage immeidately approved us for a mortgage 5 times our annual income (it took like a day), the wife and I were laughing so hard on how are we going to pay for it.

Did you say 5 times? How did 50K people buy 800K homes then?

Will the hard landing on lower end spread to the higher end?

Not necessarily. Price decompression will occur. SFHs in prime areas may undergo soft landing.

The graph is random. I put it there so that HARM will not complain.

I am touched by your magnanimous gesture and consideration, Peter P! The best part of your graph, aside from it being hand-drawn (a rare personal touch), is that the axes aren't labelled. We might assume X is time (month/year), but what is Y? Inventory? Foreclosures? NAAVLP originations? It's both fun and mysterious --thanks! :-)

And thanks to SP, SQT, Steve & Randy H for opening up the can of Troll-B-Gone in the absence of our regular Blog Enforcer, Sir Fur-X, Esq.

it's all housing boom related...

Someone made off with almost $10,000 worth of jewelry and ear-piercing supplies from a kiosk at Vallco Fashion Park in Cupertino on Monday, the county sheriff’s office reported.

Aren't they building condos there?

I wonder what is the weight of 10K worth of kiosk "jewelry".

actually, i've just checked rents around here -- they HAVE gone up maybe 15-20% in a year or so -- any new investors are busy gouging tenants and desperately trying to make good the mortgage shortfall -- so they force up rents, and wages will slowly and painfully drag themselves up behind it = inflation. if interest rates go up any more, they will put the rents up even higher. so when rates are low, housing prices inflate, and general inflation follows. when rates are high, rents inflate, and general inflation follows. this doesn't look good...

Randy H Says:

> I was thinking about your comment (and others)
> regarding women in the workforce; in particular
> regarding my wife. I think the mismatch is based
> on industry/profession. My wife is in finance, and
> came up through public audit accounting. That
> particular field has had a heavy professional
> woman presence for some time, and in many
> subpractices is now becoming female dominated,
> complete with an “old girls club”.

As I have said before I have a smart hard working Mom who never had to work outside the home after the kids were born since nice homes in Burlingame were only $25K in the 60’s and when my parents moved to the big house they are in now my Grandfather came to live with us and they had money coming in from renting his (paid off) house in SF. Growing up on the Peninsula in the 70’s (going to public school through 8th grade) I can not think of a single kid who had a working Mom.

I also have a lot of smart hard working female friends from undergrad and grad school and today only half of them are working while the other half is trying to figure out a way to stop working. I honestly can not think of a single women I know that would continue working full time if they did not have to. It will be a lot harder to get much of an “old girls club” going at most firms when most of the girls from top 5 business schools quit and spend their time planning the next Black & White ball before they are “old girls”…

I know a teacher at Burlingame High (the school that most of the kids from my Junior High end up at) and a psychologist that works in Burlingame (my best friends little sister) and they tell me that overall kids today have a lot more problems than they did 20 years ago and the kids who’s parents are never around have the most problems (the nanny from Peru does not really care if the pool guy is selling crystal meth to the 12 year old boy and nailing the 14 year old girl she takes care of)…

Over the years it seems like it went from woman with kids working a few hours a week in the school library to full time to getting masters degrees and working 60-80 hours a week like the guys. In addition to the Baby Boomers selling Bay Area homes in the next few years I think we will see a lot of dual income parents with kids selling to cash in to move somewhere cheaper so they can actually raise their kids…

My favorite quote from a mortgage broker right about the time we decided to rent & wait after relo'ing to Marin: "don't even think of spending less than $3 million with your incomes". I protested that half that much house would be more than enough (I did not yet comprehend the mechanics of the bubble, so a $1.5M home seemed reasonable at the time). She went on to explain to us how taking out a bigger mortgage, and buying more home than we needed would make us all that much richer.

One needs not a masters in finance to understand the lunacy of that logic.

SFWoman Says:

> OK, what’s 2901 Broadway going to sell for?

I heard they are "asking" $75mm

I bet they can "sell" it for about half that this year (and it will be the highest home price in SF ever).

The University of Phoenix founder paid about $30mm for his home down the street (the highest home price in SF ever) and from what I hear has not had any offers near his $65mm asking price over the past year...

SFWoman,

The USA Today article you linked was shocking (yet predictable). It speaks to the state of the market from a flippers perspective (and it's not good). As many here have suspected they have become their own greater fools.

What's more surprising is that our Podiatrist friend is STILL in pre-construction! In Las Vegas yet! Somehow in his twisted little mind a 200K profit is still attainable. If not, he'll just continue to "hold". Rally? When I call should I ask for "Blue"?

Randy H,

I get the same "riot act" from MB's and realtors all the time! "Why a man in "your position"! My position? Look, the days where clients expected their financial planner to live in the most ridiculous house in the most overpriced neighborhood are OVER! Along with high back leather chairs, spalted maple entry way and "leggy" receptionists!

Crissakes people. Get with it!

Hilarious chart!

Ha, ha!

Insane, but probably just as accurate as any other confected stats, or official-looking, scraped together graph, though not quite as fancy as the "official" ones...

DinOR said,

"Uh, every time I’ve bought a house it’s been time to “knuckle under” hunker down and keep your nose to the grindstone! There’s so much that needs to be done! (Yes even if it’s new). With all of the window treatments (unless your wife is o.k w/bedsheets on the window) organizing the garage and sorting out what goes to which room who has time to watch TV, lounge by the pool, let alone take a vacation?

Has home ownership really changed that much in the last 2 years I’ve been bubble sitting? "

....yes, it has. You and I come from the "old school" where a house is a place you put a down payment on, invest your time, energy, and money into making it a HOME. Not so today! Now, it's a "short term investment" and they subscribe to the "bigger fool" theory of home ownership.

I believe the most frustrated people in the housing market are those who want a HOME and see what the schemers are doing to the market. They are the same folks who went into the gold market back in the 70's and 80's. After the frenzy they moved over to the diamond market. From there it was the stock market.....and so it goes. When this housing market has completed it's transformation to total crap, as does every market they touch, they'll simply move on and do it all over again.

Rhetoric and theory aside, there's always judgment day and fundamentals will rise up and demand payment. The question in my mind is how much damage to the overall economy, who's going to "pay the bill", and how expensive it's going to be. I've was in business for over 30 years before retiring last year and I've seen a lot....but I've never seen anything like this. When you've been around the block a few times experience builds a certain "6th sense" into your thought process and I don't need to read a bunch of statistics to know there's something very wrong happening now. Laugh at me if anyone wishes, but my GUT tells me more than any charts do.

I've got my hands FIRMLY on the real estate pulse in four southern states, and I can tell you as a FACT; this is a national crisis, regardless of what anyone with a bunch of letters after his name says.

I could go on and on but it would be mostly mindless dribble and simply an outlet to my fear and frustration.

Doug H,

Great to have you contributing again!

I really did ask the question in an open ended way. Am I really that out of touch with the "new home ownership paradigm"? Evidently so.

For business people what little time we do get to spend "off the clock" is precious. I never had any desire to turn my home into my "primary growth engine". Then again I get to talk to a lot of interesting people on a daily basis so I can see how a guy working in a cube farm and few prospects thinks 20% a year appreciation is the greatest thing since sliced bread!

What I feel we've done is invite venture capital standards into our living room if you will. It's now a high stakes game with shaky finances and the potential for big rewards (but with an equal or greater amount of risk!)

Is there any way you can see that we can get the flipper version of home ownership back into the bottle? Seriously, I'm open!

from SF Woman's flipper article:

"Now those profits are shrinking fast. Nearly who sold from April to June actually lost money on the deal, the highest level in 2½ years, according to HomeSmartReports.com, which today will release a report on flipping activity in 147 metro areas."

When that ratio hits "five in five" wake me up, please. Until then, I'm going back into hibernation (I am a housing bear, after all :-) ).

Got screwed up on the html tags --should have read:

“Now those profits are shrinking fast. Nearly one in five who sold from April to June actually lost money on the deal, the highest level in 2½ years, according to HomeSmartReports.com, which today will release a report on flipping activity in 147 metro areas.”

Peter P, can you correct my first post & delete the 2nd? Thanks.

"Dead Owner Walking" LOL!

If the SDCIA feedback means anything it looks like flippers are just in varying stages of "treading water". Locally I've noticed one of the "hot" subdivisions has only about 10 homes sold in a planned development that was supposed to include TH and apts. as well. Upon further investigation I found that 4 of the 10 homes that are actually completed are FOR RENT!

I kid you not! 2,100 sq. ft. home avail. for $1,400 a month? Gee, just what I've always wanted, to purchase a POS in an "up scale" subdivision so I can be surrounded by desperate flippers abortions!

These steaming piles look AWFUL! In Oregon we've grown quite fond of these fake "craftsman" columns sheathed in particle board. They're as rough hewn as you'd expect to see on a dog house. That and the thought of buying into what looks to be about a decade long const. site pursued by moonlighting builders! Just awful.

M. Cote,

That should tell you how crazy CA prices have gotten. For $150K, you can still get new construction in a couple states (mostly in the southeast) and very nice 10-20 year old homes in many more.

FAB,

I guess it would be easier for women to pursue work if they don't want kids or have very supportive and child friendly husbands. But the social norm is indeed prejudiced against women. Women who chose work ahead of kids are considered bad mothers/human beings while men are expected to have work come ahead of caring for their kids.

Anecdotal Report:

An elder relative is selling her home in Wilmington, OH. 3BR, 2BA, ~1600sqft, huge yard, typical modest Midwestern smalltown middle class home. Purchased in 1999 for $112K. She listed at $139K. 60 days no offers. $125K. 30 days no offers. Her new price is $112K (for psychological reasons probably). 2 weeks, still no serious offers. Just funky "can we put down a deposit and hold it for a year" kind of crap.

The true rural Midwest may have not participated in the bubble runnup, but they seem to be taking it hard and early in the decline. She'll end up having lost very significant real value over 7.5 years in the house. And for the curious, I was just there a couple months ago. Nothing is idiosyncratic or seriously wrong with the place. Just a normal house.

Other parts of the country......

I'll go you one better....or "how low can I go". LOL

After selling my house, I got an old 3/1 house for $35k. I'm using it as a base while I figure out where to buy. Oh, I forgot to add; it's a 1ac+ on a corner lot. The house isn't much but the land might be worth something someday. I'll find a pic and share.....if you promise not to laugh. It is OLD!

Some aspects of real estate are relative.....here, housing is cheap compared to the rest of the country; but folks here don't make much money either. For a lot of America, working at Wal-Mart is a dream job and owning a house in LA, for them, is just as out of reach as it is for a lot of people making $100k in CA.

FAB,

I was not directing my comments towards you. I was clearly addressing Astrid. Thus the intro Astrid,.

My condolences for "never having met a single" person who might dare defy your notions about what constitutes "real life".

I would appreciate if you don't respond to my comments out of context to prove your point. We all already know you are right about everything.

I also have a lot of smart hard working female friends from undergrad and grad school and today only half of them are working while the other half is trying to figure out a way to stop working.

So by extension that represents the entire population and makes no particular statement about your set of friends. Thanks for helping me to understand things more concisely.

"The true rural Midwest may have not participated in the bubble runnup, but they seem to be taking it hard and early in the decline."

I'm seeing this in the Dayton, Ohio area. I have automated listings sent to me daily and there are many price reductions. When I check Zillow, I see what sellers originally paid and see that some of them may not break even, though they have owned the home for 5+ years. Many of the homes that were listed when I visited Ohio this time last year are still on the market.

Randy H Says:

The true rural Midwest may have not participated in the bubble runnup, but they seem to be taking it hard and early in the decline. She’ll end up having lost very significant real value over 7.5 years in the house.

Randy, Here's more than just anecdote about the Midwest getting shafted. They didn't benefit much from the bubble runup, and they appear to be experiencing a lot of the downside:

http://online.wsj.com/article/SB115879506345269455.html?mod=real_estate_wsj_hs

"Midwest May See a Sharper Housing Slowdown"

"Homeowners in the Midwest -- the nation's industrial heartland -- are starting to see a housing bust without ever experiencing a housing boom as more job losses trigger mortgage delinquencies and foreclosures."

A subscription may be needed to read the full text.

I've heard antecdotally that the midwest has been seeing a lot of new construction dispite a flat market. So the supply of housing has increased while the demand remained the same or maybe even gone down (per skibum's article).

lunarpark/Randy H,

Well that certainly shoots holes in the early theories we were given as to how "the bubble (assuming there is one) will be confined primarily to coastal areas where there has been the most appreciation"!

What can they possibly say now to explain a declining market in Toledo for crissakes? It's embarrassing for me b/c I bought into this! On the surface at least it seemed to make sense. How did this happen?

Astrid -

While visiting Ohio last year I was absolutely stunned at the amount of new construction.

My grandmother says she has never seen so many homes on the market in her entire life, and she's been around over 80 years. When my great aunt died, they tried unsuccessfully for over a year to sell her house. It sat even with multiple price reductions. They are now renting it out.

The Case-Shiller home price index suggests lower prices are on the way soon, including for SF:

http://money.cnn.com/2006/09/19/real_estate/futures_trading_indicates_housing_drop/index.htm?postversion=2006091911

Does anyone know who the major investors in these futures are? Hedge funds? Institutional investors? Individuals? I wonder how many holders of MBS's are buying into this?

I also have a lot of smart hard working female friends from undergrad and grad school and today only half of them are working while the other half is trying to figure out a way to stop working.

Funny, but this pretty much describes most of my college graduating classes, male and female. The half that aren't working (or are working contract/temp w/o benefits) are seeking jobs or better pay/benefits. The half that are working FT at "real jobs" (myself included) would far prefer to win the SuperLotto, STOP working and retire independently wealthy.

I'd call that gender-neutral human nature.

Robert Cote,

One of my favorite movies is The Money Pit! Tom Hanks talks about a man they found in Central Park throwing bread crumbs at himself (and he was just putting in a guest bath!) I'm laughing with you, not at you.

Oh, btw a few threads back *Glen openly asked if any of us could walk down to the bank a borrow a mil. or so to speculate in cattle futures? Well in the interest of research I tried to do exactly that. NOT from a brokerage house where you have a seasoned account, existing relationship and considerable assets! Just walk in off the street to any bank/lender that also does mortgages so to speak?

Here's what I found out. You can't do it. Just Google "Unsecured Loans" and go to town. Without "collateral" you're peeing up a rope. The MOST I was offered was 50K so that's what? 4 Hyundais? A solid FICO helps as does having your own business but with rates of 17-18% there isn't an arbitrage out there (I'm aware of anyway) that would fill THAT hole!

So we're only about 950K short of what Glen or I could borrow to "buy" a home? Anybody see a disparity here? Oh and btw the 50K was under the pretense that it was for a business expansion.

lunarpark,

Are you from the Dayton area? I used to spend a lot of time in Centerville. My dad still lives in Bellbrook; my other relatives in Wilmington.