patrick.net

Again, you are failing to recognize that not all vegetarians and vegans are aligned with PETA or any other eco-terrorists and either their goals or their actions. There are plenty of vegetarians who don’t give a rats ass what you do or don’t eat, who have no desire to take away your rights.

I am not against vegetarianism per se. I love veggies myself. However, the proliferation of veganism as a religion has obvious consequences.

On the other hand, animal "rights" organizations have huge lobbying power. They will total "liberation" of animals. There must be an opposing force to stop that.

doc1,

Hey don't get me wrong! Sometimes a body's got to do something even if he suspects it may not be right. We can't just sit on our hands. You mentioned he had rentals up in the mid-west so he's got this pile of cash dumped on his door-step every month and hey it's got to go somewhere right?

One poster had a great link about "randomness" and I think we can definitely chalk this one up to "survivor bias".

Okay, I reread the new home sales article I posted here and almost fell out of my chair a second time. A 9+% drop year to year AND MONTH TO MONTH. I thought maybe some of you missed this as you were all involved with the Lunch with Casey subplot. I would like to appeal to our resident stickiness experts (Allah and Randy). Does a 9 percent month to month drop qualify a becoming "unstuck"? (or is this lowering of the median due to condos or something else in the mix?) Or are new homes technically not sticky as they are built by capitalists (unlike the the previously owned homes which are occupied by "the people who know better")?

@austingal,

We bought using a buyer's agent. What a waste of money. I see their utility in only two things: as a security blanket for first-time buyers, so they feel like they have a "guiding hand" navigating the buying process, and as someone who does the legwork filtering out properties you wouldn't consider seeing. Unless you're very insecure or you are buying from out of town, it's not worth the 3%, IMO.

Sounds like you'll be a first time buyer if you do pull the trigger, correct? If so, here's my (unsolicited) summary of the buying process:

*****

1) Market Research: find out about the neighborhood you want, the type of house, comps, market trends

2) Secure financing: find out how much you can afford, type of mortgage product you want (please, no NAALVP's - but you already know that!), find a good and (more importantly) honest mortgage broker

3) Look at homes: mls, open houses, appointments with sellers and their agents

4) Make offers, counteroffers, counter-counteroffers until you get an accepted offer

5) Sign purchase and sale agreement: lists contingencies,

6) Mortgage agent works on financing

7) Home inspection, renegotiation or fix problems based on inspection contingencies

8) Title search, appraisal, negotiate for final Closing numbers, closing date

9) Actual Closing: usually done at your or the seller's RE attorney's office; deed signed, financing reconciled, last-minute walk-through, keys are transferred

10) Buyer's remorse

******

Basically all the financing-related steps can be handled by your mortgage agent if they're any good. They can even help find a title search company, inspector, attorney, and/or appraiser (but caveat - make sure the mtg agent is not a shady type).

Unless you’re very insecure or you are buying from out of town, it’s not worth the 3%, IMO.

Perhaps. But the seller may not give you the full 3% back if you buy without an agent.

With or without a buyer's agent, there is only you to look after your own interests.

10) Buyer's Remorse LOL!

Peter P,

Have you got the Put to Call Ratio handy for CAT? If not, do you know where I can check it for the real skinny?

JackInTheBox,

How can looking at the "Map of Misery" ever get old?

Perhaps. But the seller may not give you the full 3% back if you buy without an agent.

True. It's beyond that, in fact. Many sellers have signed contracts w/ their agents that spell out the full commission to the seller if the buyer has no agent, or if the seller's agent also represents the buyer or finds the buyer, or even if the seller him/herself finds their own buyer ("hey, this guy at my office wants to buy my house!")

Knowing this, however, would be a strong disincentive for me to make an offer on a particular property. In today's market, you still may be able to negotiate this point, though. Sellers, and more importantly, their agents are getting desparate.

(-) "full commission to the seller if the buyer has no agent"
(+) "full commission to the seller'S AGENT if the buyer has no agent themselves"

Well, the MSM has the bubble pop/crash/fizzle cooked in the books; we're done, everyone can go home now:

http://money.cnn.com/2006/10/26/news/economy/economy_outlook/index.htm?postversion=2006102616

"There's little question that the housing market is now in a recession if not a full-fledged depression. Which is not so surprising after the national housing boom that started in the late 1990s - the good times had to end at some point."

Why does the Chronicle always seem to post a "rents are skyrocketing" article every time bad home numbers come out?

http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2006/10/26/financial/f104851D74.DTL

Hmmm....

Have you got the Put to Call Ratio handy for CAT? If not, do you know where I can check it for the real skinny?

I used to have that data from OptionVue. Now I do not know how to find them.

One way is to eye-ball the option data at Yahoo and see the balance of volumes.

Why does the Chronicle always seem to post a “rents are skyrocketing” article every time bad home numbers come out?

@lunarpark,

Because the CAR tells them to. ; )

LOL. Fear mongering at its best.

Fear mongering at its best.

The balance of fear has shifted. Now who is fearful?

"if not a full-fledged depression"

And the winner of the Housing Bubble Quote of the Year is!

Damn skibum, that is messed up!

I think it's very important for all consumers/investors to understand that we can have an expanding economy without having housing as the lead growth engine! This article does a great job showing just how that can happen!

"Now who is fearful?" Certainly not I :)

Buyers have more waiting power than sellers. It is all about burn-rate again. Another flashback.

I’d be interested in seeing a break down of the penninsula of the Bay Area vs California in general.

http://viewfromsiliconvalley.com/id157.html

"The balance of fear has shifted."

I agree!

I believe the same way buyers in the last few years were scared that if they didn't buy they'd be out forever; the sellers today are starting to be afraid if they don't list for sale a property, even if they were considering selling in the next few years, they'll miss the last buyers (at these falling prices).

And more and more sellers are burying statues of St. Joseph, who “knew about moving on a moment’s notice” and “what it’s like to have housing trouble,” to help sell their homes, according to the Patron Saint’s Index Web site…. ”

Looks like divine intervention is the only realistic way.

@Peter P,

OT: Here's a site that will get your goat (pun intended):

http://www.universal-life.cc/english/animals/Free_Material_layout.htm

the sellers today are starting to be afraid if they don’t list for sale a property, even if they were considering selling in the next few years, they’ll miss the last buyers (at these falling prices).

Not yet. But we are swinging towards that direction.

OT: Here’s a site that will get your goat (pun intended):

Is it a parody?

EBGuy

Or are new homes technically not sticky as they are built by capitalists (unlike the the previously owned homes which are occupied by “the people who know better”)?

As a good rule of thumb, if you need to ask "is it now unstuck", then price action is sticky. In order to become "unstuck", it had to be stuck.

9% is a good sign that prices may be lurching. I haven't dissected the number, but assuming it's correct, it is big enough that this could be a ratchet. If home builders are leading price action, they'll likely ratchet prices instead of "smoothly flowing" prices.

--(If you don't care about sticky thisorthat, stop reading here)--

I do think that home builders are less sticky, but there's a catch. The two groups -- companies selling homes and people selling homes -- are distinctly different. Their supply curves are different. Their marginal costs are different. Their options are vastly different. And, the demand isn't totally interchangeable either. Not 100% of buyers would interchange freely between new construction and existing homes.

My expectation is that home builders cause prices to be _very_ sticky for the early stages of a decline. They do all that stuff that's linked in the analysis on my blog. They shift inventory, give incentives, defer costs, etc. Eventually, if the downturn is sustained as it is now, they rapidly unstick to unload stranded inventory while they can still make a profit.

It's really pretty simple if you have all the numbers (which only they do). They calculate the costs of dropping prices. They calculate the costs of not dropping prices. They keep prices set, or ratchet down a couple times, until they can get better returns by stimulating demand with lower and lower prices.

And the individual home owner? She can only change price. All that other junk is really almost insignificant (pay closing costs, mow your lawn, pay for pool service for a year, etc.). So she doesn't want to ever move price until she has to. She doesn't maximize her returns/profit. She maximizes her fictitious returns as she's organized her mental accounting in her head, which ignores all kinds of opportunity costs/benefits.

It seems that all animal "rights" sites rely on the false premise that animals are equals to us. I think animals are clearly lesser beings.

Back to housing:

She doesn’t maximize her returns/profit. She maximizes her fictitious returns as she’s organized her mental accounting in her head, which ignores all kinds of opportunity costs/benefits.

Exactly. Emotion does not maximize utility.

What kind of spin, if any, can the NAR put on THIS data?

Prices are still higher, compared to 730 days ago.

Soon they will use price appreciation since 2000.

….and those buyers must feel really stupid about now.

People never feel stupid. They will just feel wronged.

Basic Mental Accounting tenant, which has been repeatedly demonstrated in about every area of human endeavor, including buying and selling houses, to the point of boredom:

People hold losers too long and sell winners too early. People *feel* the effect of losses about twice the intensity of gains. They don't want to *feel* the loss, so they defer it, even if they logically know it will be a bigger loss later. That is because people also think *they will be the exception*.

This is why professional stock traders have to be trained, practice, learn, study, and make lots and lots of mistakes along the way ... just to be an average trader.

Joe Homeseller has not been trained as a professional home trader. He thinks he's the exception, and he will hang on much longer than any logical, rational, trained professional would. He'll hang on until something else poses a much bigger potential *feeling* of loss, and he has to eminently choose between the two. At that point, he will *feel* like he's _gaining_, because he's avoiding a bigger loss.

He'll come out of all of it thinking he was shrewd, never realizing that he suffered much bigger total net losses than he would have otherwise.

People hold losers too long and sell winners too early. People *feel* the effect of losses about twice the intensity of gains. They don’t want to *feel* the loss, so they defer it, even if they logically know it will be a bigger loss later. That is because people also think *they will be the exception*.

This is addressed in behavioral finance.

This is why professional stock traders have to be trained, practice, learn, study, and make lots and lots of mistakes along the way … just to be an average trader.

I hold the view that traders cannot be trained without massive psychological conditioning and re-programming.

The trader, even armed with the best trading models, is still always the weakest link.

People never feel stupid. They will just feel wronged.

I feel stupid all the time.

@allah,

That's #10 on my buying guide earlier in the thread!

I feel stupid all the time.

We are the exceptions. ;) (See Randy's post)

Sorry guys, I have to delete most of the initial post. It's probably a copyright violation to post a whole article from another source. Quoting it for discussion is OK, but not a whole copy.

Patrick

I believe the same way buyers in the last few years were scared that if they didn’t buy they’d be out forever; the sellers today are starting to be afraid if they don’t list for sale a property, even if they were considering selling in the next few years, they’ll miss the last buyers (at these falling prices).

There is a fundamental difference in buyer and seller psychology when it comes to houses. There is a bias in favor of home ownership in our economy/society/culture/age. Buyers don't *feel* like they have the option of not buying nearly as strongly as sellers *feel* like they have the option of _not selling_.

I still maintain that mental accounting is in full force, and sellers will slog along more stubbornly than any of us would prefer.

Sorry guys, I have to delete most of the initial post. It’s probably a copyright violation to post a whole article from another source. Quoting it for discussion is OK, but not a whole copy.

No problem, Patrick. We should be careful about legal issues.

I still maintain that mental accounting is in full force, and sellers will slog along more stubbornly than any of us would prefer.

As I have said many times, market is 99.5% psychology and 0.5% data entry error.

I hold the view that traders cannot be trained without massive psychological conditioning and re-programming.

It is no accident that most _top_ traders -- the superstars -- are at minimum borderline sociopaths. Once one has been successfully reprogrammed they take on a very godlike personality because they can see things "normal" people don't. They also often go down in a glorious display of fireworks at some point, if they first don't burn out and retire rich.

Sorry guys, I have to delete most of the initial post. It’s probably a copyright violation to post a whole article from another source. Quoting it for discussion is OK, but not a whole copy.

Interesting. It seems this hasn't been a problem before. Did you get a call/email from the Chronicle? Could it be they don't want their article associated with a whole string of comments about how the market is tanking? Did the CAR read this thread and call up the Chronicle?

My paranoia is running amok!