patrick.net

someone wrote.
"I think, very few buyers today will regret it and of those who do even fewer will admit it. There are lot of intangibles associated with the house. And there are enough mental accounting opportunities to feel warm and cozy."

Well, under the present circumstances, there's a loose negative correlation between that sentiment and the number of years that someone's lived in Santa Clara County. The shorter the time they've lived here, the more likely to have that sentiment.

Peter Says:

> I’ve been reading this site for a few months now and
> it’s kind of funny sometimes. It’s almost like there’s
> an expectation that people should NEVER buy a home

Many of us have owned homes and plan to buy again, but not when the property tax bill is getting close to or in some cases even more than the rent of similar homes and condos (like it is in parts of San Francisco)

> The prices have softened, that’s why we’re buying a new
> home. It’s a great buy in my opinion. Sure we could rent
> and save maybe $1000 a month

You are not going to get many people giving you a hard time if you are only paying $1K more to buy than rent (in doing my taxes I added up all the costs of my race car for 2006 and I’m paying almost $1,000 a month for a toy I use less than 10 times a year)…

P.S. Where in the Bay Area did you buy a place for just $1,000 more than the cost of renting?

allah,

CEPR attempts to factor in the erosion of equity basing their calculations on that particulat market's overvaluation. Granted, it's a guess at best but for the time being it's one of the better tools out their. Give it a try just for a goof! :)

particulat? How about particular?

PAR,

Good summation. Totally accurate, and good for you btw! My youngest sister lives in Thousand Oaks and my accountant brother-in-law has repeatedly said that many of the folks that bought recently in their area simply can't afford to offer any kind of price reduction. Buyers at or near the median came in w/zip down or MEW'd out cash so they HAVE to ask close to what they owe if they expect to walk away without a short sale.

There's not a lot of wiggle room. For sellers above the median "many" came in w/equity from previous sale so these are the ones that can take a loss (however unpleasant that might be).

allah,

CEPR attempts to factor in the erosion of equity basing their calculations on that particulat market’s overvaluation. Granted, it’s a guess at best but for the time being it’s one of the better tools out their. Give it a try just for a goof! :)

I checked it out and yes it is just a guestimate; it seems that the combo box for fixed rate/ARM doesn't seem to have any effect. Wow, for my area he has the appreciation at -56% (yikes!) which is worse than I thought.

The problem with this calculator is that many people who buy will put down 30 years as the amount of time they will stay in the house and this will usually favor buying. The problem is, can you honestly plan out the next 30 years of your life? Some people just don't get it!

Going and looking up the tax information and sales history on a property you're interested in can be telling. A few of the houses on the market that my wife and I have looked at have been priced at 6% over the loan amount made 2 years ago.

Gee... I wonder where they got their price point? :D

Those are the people PRAYING for a spring bounce.

allah,

Yeah, I'm trying to make it to Friday but some FB playing w/the calc. keeps skewing it until it DOES make sense! If the REIC had their way everyone in America would re-fi every year and flip every other year?

We keep being told that (7) years is the avg. stay in a residence but I seriously doubt that's accurate. It seems to me that over half of the existing homes for sale are from 2004 and newer? Again the mid-west could be be a stabilizing force.

PAR :

True. The sales volume has crashed, and prices definitely have stalled or decreasing depending on who you ask. So far all the bulls have completely ignored (or failed to answer) one question.

In spite of good job market, good stock market and historically low interest rates WHY is the market stalled or falling ? These should be good times. So what is it that's keeping it lame ?

So stop complaining about the bearish attitude here. Stop that "owners will pass on the cost via rent increases" crap. Stop that "how everyone wants to live here" and "BA will always have a lot of rich people" blah blah.

Just accept that it was the credit bubble that caused it, and not economic fundamentals.

allah,

We keep being told that (7) years is the avg. stay in a residence but I seriously doubt that’s accurate. It seems to me that over half of the existing homes for sale are from 2004 and newer? Again the mid-west could be be a stabilizing force.

I would say (and I can only speak for my area) that most people who are planning on buying for the first time will need to trade up to a bigger house in 5 or more years due to a growing family and this is not going to happen even if they can afford to keep it that long.

I like to study the psychology of those who are buying and one of the best places to find these people are at sites such as this.

You might want to look at sites like that in your area just to see what these buyers are thinking (Newlywed women love to talk about this stuff). It seems one of the first things couples want to do after getting married is to buy a house and alot of them don't even know what a housing bubble is!

Here are some that just want to get the hell out of Long Island.

allah,

When we really look at it, a couple only has a few catalysts to necessitate a move.

1. Just got married, fixer upper/starter home.

2. Kids, need more room so a move up home.

3. We've "arrived" dream home.

4. Down-sized home.

Obviously no (1) home can suit all these life events. In many cases (with a little updating and/or additions) you could easily dwindle that down to 3 moves and with some effort 2 homes. So why is it that we're we find it so necessary to swap houses every 3-5 years?

We did "starter" and within 3 years got our move-up/dream home (10 years) and while renting we're looking for the right down-size home. So we were able to shave off one step. Gosh, it's funny b/c I don't "feel" deprived? Should I? :(

I looked at that site, and at least most of them are saying "Hey, offer below asking! It's not a seller's market!"

Even people who don't think (or know about) it's a bubble at least realize that prices are too high right at this moment. (Some of them probably still expect their house to start ATMing for them in the next year or two.)

PAR,

Agreed. Bulls may have one thing right? Up to this point there hasn't been any concrete reason for home prices and sales to have tapered off so significantly other than a change in perception.

Buying now, (just as the "hard stuff" is getting ready to be passed around) makes less than no sense. With "the re-set" fixin' to move in like Clark Griswold's rude relatives and the first wave of "must sell" properties hitting the auction block it's just a matter of enjoying the show. :)

SP,

Gotta' admire your energy! I'd read Nigel's post and got that feeling you get when someone from work asks if you can help them move. He's somehow drifted from being a one time "reason-a-bull" to.....?

I looked at that site, and at least most of them are saying “Hey, offer below asking! It’s not a seller’s market!”

Well yeah, it's definetly not a sellers market, but they are saying like $10k - $20k below asking, big deal!

Even people who don’t think (or know about) it’s a bubble at least realize that prices are too high right at this moment. (Some of them probably still expect their house to start ATMing for them in the next year or two.)

Seems that way.

One of the couple's even posted a link to my site; you will notice that everyone that shrugged off the fact that prices are going to fall are couple's that already bought. :lol:

I thought that was in El Salvador?

Hey all,
For a few good Monday morning chuckles, check out this cnn piece:

http://money.cnn.com/galleries/2007/real_estate/0702/gallery.tycoon_updates/index.html

Apparently, they profiled a bunch of real estate "tycoons"-in-the-making back in 2005, and this is a follow-up piece. It's amazing how every one of them is either unable to sell and/or trying to rent their "investment" properties. These are 6 answers to the question we kept asking, "who the hell are all these 'investors' who continue to buy real estate. They apparently are now some of the ones left holding the bag.

My favorite is Sky Minor, the "rock musician/real estate investor."

From that same link:

I agree. The housing prices will not plummet because face it, LI is a popular place to live. It is near NYC and that will always keep LI booming (unlesss some sort of natural disaster strikes.) Its not like a house is going to be 500K today and 300K next year.

This is the typical Long Island mindset of those who have already swallowed the pill! Sound familiar?

The people who are losing out are those who bought in 2004/2005/part of 2006 at the height of the craziness and are now trying to sell (and make a profit!).

Yeah, those are the people who are losing out, we got our house for $10k less! We are lucky! :lol:

My favorite bit from the mortage news posts today :

Cassandra Grant of Hartford said she has been having trouble getting a mortgage to buy a home, because her credit score is 585 and her income is below $30,000 a year.

Well, at least lenders have wised up A LITTLE.

Dear Cassandra Grant,
If you want a house, please do the following :
1) Stop using your credit cards. Pay them off completely. Once they are paid off completely, then you may use them for small purchases that get paid off at the end of the month. No more carrying balances on your credit cards.
2) Once your cards are paid off, start putting what you USED to have to spend on paying your credit card bills into savings. Buy CDs, open a money market account, or SOMETHING.
3) Repeat 2 until you have 20% for a reasonable priced home in your area that you can afford on your salary from the job you can reasonably expect to keep. Given that you're 51 at step one, you may be 55 or 56 by now. In which case, calculate what you'll be able to afford when you no longer have a job and are living on Soc Sec benifits, unless you want to work until you're 86, you better aim for a house you can pay off quickly, which means the total price had better be less than 3x your salary. I'd aim for 2x, and sock every dime into paying it off.
4) Finally, you can buy that house.

SP, DinOR, rat patrol, PAR, Stuckin BA, Headset, allah & others,

Thank you for your tireless Troll-fighting efforts. We seem to getting a bit more traffic here today. Perhaps the pool of new suckers (and commissions) is drying up, and our REIC butt-buddies "Nigel" & "OpinionsPlease" have nothing better to do?

SP, DinOR, rat patrol, PAR, Stuckin BA, Headset, allah & others,

Thank you for your tireless Troll-fighting efforts. We seem to getting a bit more traffic here today. Perhaps the pool of new suckers (and commissions) is drying up, and our REIC butt-buddies “Nigel” & “OpinionsPlease” have nothing better to do?

Trolls are fun; I find them very amusing in fact they're one of the reasons I like to visit this blog :)

How is everyone doing that is selling their home?

And the winner for the Most Serial Re-Finances is......?

Every time that roll that paper over they're adding another 3 to 5K + in fees? Probably at a minimum. Then when this guy goes to sell that will need to be figured into his asking price, of course.

Anyone here following the Rose Garden area of San Jose? I just received this forwarding from a realtor:

> Dear all,
>
> Just a quick note about a significant price reduction on my listing
> at 1829 McDaniel Ave. The owners are clearly motivated and the
> price is now reflecting this.
>
> Please pass the info on to your friends and family who might be
> interested in this property.
>
> Here are the details for a quick refresher.
> http://www.agentbohl.com/pw/portfolio.html

The owners of this house paid $850k for it 9/15/05 (currently asking $995k AFTER a $54k reduction). Zillow (for what it’s worth) estimates it’s worth $907k. Laughable, is that the current owner bought at the absolute peak of prices, but now thinks they can unload it for $145k more than they paid less than 2 years ago! Hilarious! Please…

Greenspan warns of likely U.S. recession

Greenspan also said he has seen no economic spillover effects from the slowdown in the U.S. housing market.

"We are now well into the contraction period and so far we have not had any major, significant spillover effects on the American economy from the contraction in housing," he said.

OT, but Alan Greedspan retired and passed the "baton" (a lit dynamite stick) to Bernanke a year ago. So why can't he just move to Leisure World, wear funny hats, hike his pant up to his chest, and go fishing like everyone else?

Just shut the fuck up already!

OT, but Alan Greedspan retired and passed the “baton” (a lit dynamite stick) to Bernanke a year ago. So why can’t he just move to Leisure World, wear funny hats, hike his pant up to his chest, and go fishing like everyone else?

HARM, It's called CYA...

skibum,

"Otherwise it's been uneventful"

You mean the part where your specuvestment rental was televised on an episode of Cops as the front window got blown out by a shot-gun wielding maniacal ex-boyfriend as the "pork chopper" circled over head?

lunarpark,

Again, I'm just left to wonder aloud as to the logic of some of these purchases? I suppose it could be true that there were some burning urgency where this might be explained but it appears this is nothing more than a flip gone flop and desperation not to become a bag holder.

Net of commissions they'd barely break even. So 17 months after moving in and even prior to attaining tax free nirvana they're ready to pull the plug? Sheesh.

I dunno why you guys bash Greenspan. In a brilliant bit of maneuvering, he took what would have been a horrible recession and postponed it for 5-6 years and pushed the majority of the damage onto the middle and lower middle classes via a massive credit bubble. These people obligingly bought us out of that recession.

Now that the economy is on less shaky ground, it's time to salute those selfless people whose SUV's and home ATM machines kept us going. Salute them, and take their houses away.

DinOR,

Logic? Logic?? What is this logic you speak of? :)

Looks like there are two other houses for sale on the same street as the one I posted:

3br/2ba listed 2118 sq ft listed for $1,098,000 (Zestimate $943k). Sale history:
11/15/2004: $825,000
05/07/2001: $725,000
05/14/1998: $399,500 (Wow.)

The other has no sale history available. They are asking $1.2 million for a 3/3 1660 sq ft.

Wake me when it's over...

Is Rose Garden really that nice?

I remember it is very close to the flight path of SJC and it is quite noisy when wind blows from the south.

"Is Rose Garden really that nice?"

No.

Does anyone know what the school district is like? I cannot imagine these asking prices for that area.

Rose Garden is a pretty nice area, but the schools aren't that great. At least that's what I understand.

SFBubbleBuyer Says:

> My favorite bit from the mortgage news posts today :
> Cassandra Grant of Hartford said she has been having trouble
> getting a mortgage to buy a home, because her credit score is 585
> and her income is below $30,000 a year.
> Well, at least lenders have wised up A LITTLE.

Last year it would have been easy for her to get $500K with a stated income neg am IO loan…

> Dear Cassandra Grant, If you want a house,
> please do the following :
> 1) Stop using your credit cards. (and other good ideas)…

While SFBubbleBuyer gives some good advice my advice to Cassandra is to:

1) Find a way to make more than $15/hour before you think about buying a home. If you can’t figure out how to get paid more than $15/hour you are not ready to buy a home (I pay the people that clean apartments for me more than $15 an hour and the only guy I know that makes less than $15 an hour is the (possibly slightly retarded guy) that sweeps and dumps the laundry room trash at one of my buildings)…

SFBubbleBuyer,

You've gotta check out "Real Financial Hero's" on youtube!

Here's to YOU Mister and Mrs. Too Much Home Buyer!

Rose Garden is a pretty nice area, but the schools aren’t that great. At least that’s what I understand.

I do want a nice area with bad schools. But I want something with an average age of 60+.

lunarpark,

Well I don't know what those quick turn-around buyers think they're accomplishing but I happen to believe it speaks volumes about the thread we did regarding the impact of the internet on the bubble!

People see stuff like Zillow etc. along w/flippersintrouble and they're getting real time feedback. I mean, how can so many loanowners all be thinking the same thing at the same time?

Allah's link on Long Island showed one young gal that had tried without success to sell her home last fall and this spring she said something like THIRTY people listed the same week she was going to re-list! Coincidence?

"But I want something with an average age of 60+."

The people or the house?

I was just thinking today, HUD reports that the median (household) income of Santa Clara to be $97,100.

Is it possible that's skewed lower by all the Pre-Prop 13'ers who paid off their $70k houses, and now just live by refi'ing?

Could it be that the median income of people who are in the market to buy, is significantly higher?