patrick.net

@Jon,

I commented on your post re: rent control in the previous thread.

Randy, academics think inside their own little bubbles. To them, it is all about what ought to be rather than what is.

It may be unfortunate, but the ability to kill the other guy looms large in determining economic equilibriums and threshold limits.

Very true. Not even unfortunate. Just real.

If it is, the outcomes are unpredictable.

But with a magic 8-ball from the previous thread...

What is a "job" anyway? To me, it is a labor transaction. So long as the payoff (wage) is real (cold, hard cash), the job is real.

newsfreak,

My bad. I've just gotten a little hyper-sensitive any time I hear someone (here or elsewhere) draw an immediate parallel to HD employees and the global economy. I realize they get regular paychecks w/taxes deducted but every time I go into a dinner or HD it seems like there are few familiar faces. So I should have placed more emphasis on their transitory nature than the "underground economy" aspect.

(Most people working at HD would prefer to get unemployment) and getting "let go" is not only their fantasy, it's GOOD for them! :)

I agree with FAB about the prices dropping quickly once the stickiness is overcome. Perhaps if we entered massive inflationary pressures the prices won't come down too far nominally, but in real terms I believe it is inevitable.

I think that the housing prices here are merely experiencing a little friction. Once gravity/mass overcome that bit of stickiness the ball will roll down the hill.

For people interested in local (SF) housing policy decisions:

Event: Middle-Income Housing – How Can We Build It?

Plan C members are invited to a public forum and panel discussion to address San Francisco’s Middle Class Housing Crisis. Date: Wednesday, March 28, 2007, from 11:30 a.m. to 1:00 p.m. Location: Koret Auditorium, San Francisco Public Library, 100 Larkin Street (at Grove). Registration starts at 11; a hosted lunch follows from 1-2 p.m.

One of the glaring weaknesses of the housing market in San Francisco is our seeming inability to build homes for the middle class. These are families that cannot afford most new market-rate housing, but are not eligible for subsidized housing. The San Francisco Housing Action Coalition (SFHAC) is hosting a panel discussion to hear how other cities are tackling this problem and whether those solutions can be applied here.

The featured speaker will be Henry Cisneros, former Secretary of the U.S. Department of Housing and Urban Development under President Clinton and currently the Chairman of City View, a firm that provides project financing and other support to build middle class housing. To give a local perspective, the panel will include noted Bay Area developer Art Evans and Matt Franklin, Director of the Mayor's Office of Housing.

We know that government subsidies can’t solve the affordability problem alone. Come hear participants in the housing marketplace talk about potential solutions to middle-class housing!

Complimentary lunch and refreshments follow the program in the Latino/Hispanic Community Meeting Room located across the lobby from the Koret Auditorium. Koret Auditorium is located on the Library’s lower level. Enter at 30 Grove Street and proceed downstairs.

Please RSVP to Tim Colen, Executive Director of SFHAC at 415.541.9001 or annie@sfhac.org.

I never could do Top Ramen, always pasta and mac ‘n cheez.

I just ate a cup of ramen noodle.

I have to say–housing is no more a Ponzi scheme than the stock market or the lottery, it is just what you are willing to risk.

newsfreak,

If all the damage from housing bubble risk could be contained to the ACTIVE AND WILLING MARKET PARTICIPANTS, then I would totally agree with you here. Unfortunately --even absent a federal FB/MBS bailout-- this will not be the case.

Some of the more prominent faces of HB "collateral damage" already include":

--Responsible borrowers/savers who have been outbid/priced out of the housing market for years, thanks to reckless lenders and specuvestors (Randy H, Peter P, Patrick & myself included).

--Naive, ignorant but otherwise well intentioned buyers who trusted their MB or Realtor's advice and bought with an NAAVLP, to avoid "being priced-out forever" (not completely blameless, true, but hardly malevolent greedbags either).

--People who, through no fault of their own, will lose their jobs in the unfolding bubble crash/correction --especially if it triggers a full blown recession.

--Defrauded penion & mutual fund investors who may get burnt by supposedly "safe" AA/AAA-tranche MBSs/CDOs, as the sub-prime & Alt-A fallout cascades into the upper tranches.

Jon,

That's kind of my point. What do construction guys do when there's no work? Oh let's see... there's drinkin' and huntin' and drinkin' OH! and fishin'...

I mean any realtor that's "banking" on making regular commissions obviously hasn't been around very long so in ways I see these folks more as having an "augmenting" income than a "core" income that the other spouse usually provides.

True, there will be impacts but this "massive spillover" effect has been greatly exagerated.

Maybe this is the problem in Randy's hood of choice:
Between January 2006 and January 2007, every Bay Area county except Marin saw a rise in foreclosure actions, according to RealtyTrac. Solano County had the highest foreclosure rate in the state in January.
Alameda and Contra Costa counties also had rates that were above the state and national averages. Rates in Marin, Sonoma and San Francisco counties were well below average.
http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/03/06/BUG9DOFRGV1.DTL

Plan C members are invited to a public forum and panel discussion to address San Francisco’s Middle Class Housing Crisis.

The solution: scrap the BMR program and allow building without restrictions.

NV, a house is "worth" whatever a buyer is willing to pay. It is just that this "worth" can change quickly.

I also do not think it is necessary to enfore the 20% downpayment rule. It would be nice but artificial. When the trend changes direction potential buyers will quickly learn that over-leveraging is counterproductive.

HARM,

Funny to note that all of the "secondary casualties" you mention probably had reasonable objections and sensible questions going in? Of course when you're knocking down the big bucks the REIC simply doesn't have time to address petty issues like having loans actually re-paid!

in any crime there are victims

There are many victimless crimes.

A 800K+ in Sunnyvale WITHOUT cooling?

NV,

I like your ANGER! Embrace the dark side! :)

I would not even contemplate buying something for $800K that did not have land and more land.

That house has some land by BA standard though. 1/8 acre is better than 1/20.

I think cooling is necessary pretty much anywhere in the Bay Area, especially in Sunnyvale. You know, sunny-vale.

Not enough land for 4 cats and 2 dogs.

Perhaps. My 2 cats would like some grass, some flowers, and a butterfly.

OK, my friend who bought the $2.1 million house last October told me she is having trouble keeping up with her bills. It is really going outside the sub-prime market, right here, in my 'hood.

Joe_renter,

As aggravating as it can be you really need to get over to flippersintrouble! It's just listing after listing of game playin' s.o.b's! I realize that it's the SAC area but you get the idea pretty quick. The author posts the sales history and it's just incredible. Homes that aren't even 3 years old on their 4th owner? Many are not old enough to have required any work.

good sweet water

It does not exist in the Bay Area.

We have a choice of bad water or awful water.

Even that seems like a crime.

Honestly, that area is relatively safe and crime-free as a ghetto.

Joe_renter,

If it's abandoned and overpriced homes you're after you've simply got to get over there! You know in time we should be able to piggy back off of his model. With SAC being the epicenter for the NorCal meltdown it was only logical it start there first. Give it time......

Oh and boycotthousing has really picked up where Mr. Overpriced Blogspot left off! Simply hilarious overpriced POS postings complete with "colorful" commentary!

SFWoman said:
OK, my friend who bought the $2.1 million house last October told me she is having trouble keeping up with her bills. It is really going outside the sub-prime market, right here, in my ‘hood.
Do you think they'll try to sell?
What goes on the chopping block first -- the kids private schools?
This is too bad... if they can hang on by their fingernails they should be okay in 30+ years. You might want to refresh folks on their LTV (I believe they put down a sizeable downpayment).

Lower LTV is not necessarily helpful. The final T and I in PITI do not change even if you put 100% down.

Look what heli-ben has to say:

Fed officials have often argued that the combined $1.4 trillion investment portfolios held by government-sponsored enterprises, or GSEs, such as Fannie and Freddie, are so large and unwieldy that they present a systemic risk to the broader economy and so should be curtailed.

Really?

"The size and the potentially rapid growth of GSE portfolios, combined with the lack of market discipline faced by GSEs, raise substantial systemic risk concerns," Bernanke said in a speech via satellite to the Independent Community Bankers of America bankers' conference in Hawaii.

No kidding!

EBGuy,

I would imagine the first to go would be club memberships and bar tabs at the club. Vacations have already gone,as have expensive restaurants and fundraisers. I think they'll be OK if they jettison one club (with its fairly good sized bar tab). But they are living paycheck to paycheck, and not saving, in a $2 million house that needs work.

The financials, almost 1/2 down, remaining mortgage 5x income.

Doesn't heli-ben realize that there were entire books written several years ago documenting just that?

Are there any housing bull sites left to go visit?

Are there any housing bull sites left to go visit?

If not, we can start a bull thread. :)

Oh and boycotthousing has really picked up where Mr. Overpriced Blogspot left off! Simply hilarious overpriced POS postings complete with “colorful” commentary!

Hey! He's stealing my readers!

http://burbed.com was the original in housing mockery. Boo.

I will have to disagree with most of the posters here. Stickiness will NOT go away unless JOB MARKET in BA cracks first.

I am strictly talking about the more desirable neighborhoods that most people on this forum target. I am sure Oakland is already dropping like a stone but you won't want to live there anyway.

As long as there are still bullshit web 2.0 jobs floating around, housing price will continue to be sticky. In reality, there are no shortage of double-income families with $200K+ savings and $200K+ household income targeting the better parts of BA where supply is relatively limited (200-400 SFHs on the market each year, and the neighborhood has lots of long-time owners who own their homes free and clear, think FAB's parents).

Only when layoff and gloomy job reports of BA start to instill fear in these high wagers will the housing price start to spiral downward swiftly. Taking on a 30-year loan is all about expectation, you expect your income to be steady and rising. Such an expectation is the main pillar for the purchase, because most people still place a big premium on home ownership, even if they know the housing price may go up and down in the next 30 years.

Jobs will have to go first, or you will continue to see the stickiness all the way down.

eburbed,

Good stuff! I don't know why I get such a kick out of that stuff? I always love to see the "ready to re-model" listings. Why? Because other than having to re-do a foundation I've pretty much had to do it where houses are concerned and it all SUCKS!

Unlike Flip dat' thang shows most of these sales prices pretty much imply that the new "owner" would have to live there during rehab. Drywall dust in your pancakes anyone? Sucks.

In reality, there are no shortage of double-income families with $200K+ savings and $200K+ household income targeting the better parts of BA where supply is relatively limited

A 200K household with 20% downpayment cannot afford a 800K house comfortably.

Jobs will have to go first, or you will continue to see the stickiness all the way down.

Hopefully, jobs will go away soon. I hate circling for parking spaces.

OO,

This time last year I would have probably agreed with you without reservation. So much has transpired since then that I can barely stay on top of it. Jobs aside, bubble-sitters aside this is really now between FB's and their lenders.

Jobs will have to go first, or you will continue to see the stickiness all the way down.

They will, recession around the corner!

Peter P said :
A 200K household with 20% downpayment cannot afford a 800K house comfortably.

That's what caused me to find this site in the first place. My wife and I started looking, and we are priced out of 'starter homes' anywhere near where we work. I hadn't paid attention to housing until I started looking for one. And ouch. Just ouch.

I think OO is right to some extent. And I do think the job market will slow down as well when people realize that yahoo or google is not gonna gobble up every web 2.0 startup in sight.

Regardless, the housing market has to start spitting back due to the other factors like speculative buying, foreclosures, stated income and other related nonsense.