patrick.net

70% or so of all people now think this market is normal and rational. It's all about following the herd.

Moooooooooooooooooooooooooooooooo!

The market is efficient.

HAHAHAHA

You know. I don't know why. I have no logic to base this one, just a feeling. But it seems people are starting to get nervous about this market. It's not so much *what* is being said, but *how*.

Me, I live on a comfortable 6 figure income. No huge debt. Have a great place to live in a very nice town. I feel no bitterness toward those who managed to time the market correctly, and I have a great many friends for whom I am very happy for. I am just concerned that the market fundamentals don't add up, and some people I like a great deal are taking on tremendous risk.

I could buy in, and if this market continues to be this irrational for substantially more time, I may have to. But until that time comes I am going to enjoy the freedom that comes with not being so overextended that I am only one misfortune away bankruptcy or foreclosure. I don't have a rich mommy or daddy to bail me out.

I think SactoQt is quite representative of us...

I am just concerned that the market fundamentals don’t add up, and some people I like a great deal are taking on tremendous risk.

This is exactly our philosophy.

I just think it's easy to get emotional when one's a$$ is on the line.

Jack, you're not even remotely in the same category as Marinara. You use actual arguments that have a factual basis behind them. We like you, we are willing to listen because you are not angry or hostile.

As a homeowner, WHO CARES IF ‘THE BUBBLE’ BURSTS??!!

If i saw my exact house, on the exact block sell for 10% less tomorrow, sure i’d feel bad, but that doesn’t mean i’m going to sell my house and commit suicide!

I totally agree here. Perhaps we have more in common? If one choose to, and can comfortably afford the payment for a long-term home, I do agree that buying is not necessarily a bad thing even now.

This blog is a lot more rational than most others and is certainly not just a bunch of bitter renters. :)

Housing is very sticky, and once the mania ends, people will focus on LIVING LIFE, than checking the MLS listings to see how much comps have gone up again.

Stickiness does not prevent crashes. It only means a lack of liquidity.

I personally do not believe in market efficiency or any form of market fundamentalism.

In just decades, we have seen Warren Buffett, George Soros, the 1987 crash, and the LTCM debacle. All are supposed to be very high sigma events.

The market may be chaotic or hard-to-predict but it is quite far from being efficient.

(I used to be a faithful believer of market efficiency. Now I think that even financial astrology has more merit.)

Marina, onpr, one thing is that it took a few transactions (< 5% turnover ?) to create this boom. It can take even fewer transactions to depress home values.

My advice to renters who want to buy is this: LOOK FOR PROPERTIES DURING THE SUMMER (NOW) or between Thanksgiving and New YEar’s (holiday, rain, rain, rain). This is the time of more motivated sellers. You will see more opportunites. You just have to be diligent.

Marina, thanks for your advice. We know that already. :)

Looks like it’s going to take the whole two weeks…..

I think Marina is calming down already, after finding out that we totally welcome contrarians...

Please refrain from personal attacks though.

Perhaps it is not a bubble rather a gas balloon. But even in that balloon journey will not be complete unless is eventually comes down. Yeah it may land on higher grounds. But it must land.

The market IS efficient. You just have to determine what time frame efficiency is. We are specks in a long timeline.

LTCM got hammered. The market was efficient, otherwise they’d continue to make outsized returns.

So you do think that the housing P/E ratio can return to the historical average because market is efficient in some timeframe? Or it is different this time and prices have entered a permanently high plateau?

If market is efficient, should it be efficient in any timeframe that reasonable arbitrage can occur?

Interesting you don’t respond to my REAL TIME/REAL LIFE example of properties in prime areas going up?

Forget Fake P, Marina can actually be Face Reality.

BTW, Marina, % over asking is not necessarily representative because realtors(tm) lower prices to induce bidding wars.

Asking 1M for that 1425sf place in Marina? Give me a break. That is about $700/sf. Even SOMA lofts cost that much. This is Marinara we are talking about!

Please do not assume that renters always rant. If we are convinced that prices will not crash we would have bought already.

I think downtown Tokyo is pretty much the definition of prime RE. Ditto Hong Kong, ditto Sidney, ditto London…

What is more "prime" than Tokyo. During the Japan RE boom the land of the Imperial Palace was thought to be worth more than the entire California. (Definitely more prime than Marina)

Jack, I created this post. :)

So now I get to see...

Astrid, my parents moved from england we just last year sold out home.
Bought: 37k in 1982
Sold : 350k in 2004
These numbers are in U.K. pounds
How can RE not be a sure bet. Anywhere you live….( over the long term)

onpr, let's say that RE is a good long term bet if you do not stretch to play. :)

But what is long term anyway? I would say at least 10-15 years.

SactoQt, is it very hot in Sacramento today? It is too hot for golf here. :)

Did you look yet?

They all have distinct IP addresses. It is not very conclusive because one can always use another computer elsewhere.

At least 110°. Please tell my you're not implying my brain is fried?

At least 110°. Please tell my you’re not implying my brain is fried?

Oh no. Just curious. I may consider moving to Sacramento in the future. (I go there about once a month, less frequent in the summer)

I like this area a lot actually, but the summer's can be brutal sometimes.

Jack, honestly, I think Marinara is a different person. His hostility index is down, no?

Ok Jack. You're weird.

Call me weird, but I like the heat..

And you live where? North Bay?

:D

I hear BA has later summer's than here. A friend said that Sept. Oct. can be pretty hot out your way.

"Dang Marinara — 73 posts in 2 hours, you are a moooooover and a shaker"

Traffic is approaching that of Ben Jone's site... for now. :)

Ewe know that Marinara.

“The blog….Where people really DO care about YOU!”

Here, everybody cares about everybody. The choice of language is another issue though. ;)

(On Ben's blog, even I was called a troll once because someone misread my comments.)

(Would you like to be called “Ms. SAUCE”, Astrid? Hmmmmmmmmm?)

Now Jack. That's just uncalled for.

I think we've all run into Marinara type people in our personal lives, and it's hard not to wish people like that get burned when there is a reckoning. But, by and large, the people out there buying homes these last couple of years are just being taken advantage of by unscrupulous lenders pushing NAAVLP's, and no one wishes them HARM. I am very uncomfortable with the idea of a massive crash that could really hurt the economy. If I could wish for anything it would be a correction that forces lenders to tighten their standards so that people who don't know what they are doing don't get in over their heads anymore.

Ahh, life as a homeowner with 300K in liquid assets, and a nice SFH in The Marina is so wonderful.

You are not going get us jealous. You may try but you will fail.

I admire Soros/Buffett and am perheps jealous of someone who owns a Gulfstream G550. From your comments, I guess that you still fly commercial. Work at it. :)

Rented Lol.

You were not directing the language worries at me were you?

Not at all. Language is actually a non-issue. We do need some f???-words flying around occasionally or this will be too PG-13, right?

Jack
It's nice to know you're not a fixer-upper.

Actually though Peter, I NEVER stop being amazed at your INCREDIBLY unshakable patience. Are you that way all the time? or is it something you developed professionally, and you are just faking it!

What do you expect me to do? I lose patience only when I am waiting for food.

Peter P Says:

What do you expect me to do? I lose patience only when I am waiting for food.

You sound just like my 19 month old son. Come to think of it, so does Marinara, but my son is more articulate.

Not more articulate than you Peter. ;)