patrick.net

I don’t think a nuke will be set off.
More probably, they will wait till they have many nukes in many cities, then set them all off at once.

Isn't this the premise of Team America: World Police? I will be afraid when terrorists start emulating puppets.

Peter P,

Love is fear that you won't reproduce. Fear is the tool your genes use to make copies of themselves, you know. "Don't do that, it'll get you killed!" "Don't be different, or that hot girl won't let you impregnate her!" "Don't drive a crappy car or you won't be able to get a trophy wife once your current one quits droppin' eggs!"

Love is fear that you won’t reproduce.

I have no conscious desire to reproduce at this point. I will probably become a bad parent.

Peter P,

I never claimed it was a concious desire. :) I'm just saying love is how our genes trick us into investing energy in making little squalling vehicles for the genes to keep on going.

I’m just saying love is how our genes trick us into investing energy in making little squalling vehicles for the genes to keep on going.

Interesting theory. :)

My fear– that spring will never come

Singing along...

...
I have confidence that spring will come again
Besides which you see I have confidence in me
...

SFWoman,

Agreed. The New Yorker's reporting has been uniformly excellent. I also like reading the New York Review of Books for their Iraq and Bush administration coverage. Brad Delong and Washington Monthly are also pretty good.

Sorry for Off-Topic-ing,

Could someone point me in the direction of finding out what the catches of the accelerated mortgage programs were?

I seem to recall a discussion a while back where it was claimed that in New Zealand or UK or somewhere that these mortgages were under scrutiny - but I can't remember why.

SFWoman Says:

> FAB, Was the rabbi Michael Lerner from Tikkun?
> I really respect a lot of his views.

I don't remember the name of the rabbi (he was on Bernie Ward's "God Talk" show that is on early every Sunday)...

Subprime fever strikes the SF Bay Area Craigslist ReduceOMeter
After levelling off for the past couple of weekends, the ReduceOMeter increased to 142 listings for March 16-17.

SF Woman Says:

> My housekeeper’s son bought a house in SF about six
> years ago and a couple of years later was transferred to
> LA. He rented out the house while he was gone and was
> finally transferred back to SF. He tried to give notice to
> the tenant a few months ago and the tenant is filing a
> lawsuit to stay. Although he has a legal right to move back
> into his own house the tenants unions have made the
> tenants smart enough to game the issue, and the tenants
> know that in the long run it will be cheaper for him to pay
> them off to move out than to hire legal help…

Other than the homes they grew up in my parents don’t own any real estate in the city of San Francisco.

I know people that are crazy enough to try and make a profit renting homes and apartments in SF and all of them use Andrew Zacks http://www.zackslaw.com

eburbed,

I think the thread was:

Mortgage Acceleration? (Freedom or Bunk?)

Or something like that?

DS alluded to there being "some problem" with them in AU but didn't have any specifics IIRC.

CB,

Well..... that's "partly" true. If you want (and can afford) to make double/triple payments then yes, you will knock years off your mortgage! But that only deals with the mort. and none of the other debts like car payments, credit cards, college loans etc.

The trick is to employ a system that allows you to retain your current budget and still attain those same results! But I'm just 'some sales guy' so what would I know? :(

Top 10 U-Haul Destinations For 2006

Wow, this is kind of surprising to me. Los angeles is number one on the list. N.Y. didn’t make the list, go figure!

Why are people so eager to move to LA? Still!

eburbed Says:
March 19th, 2007 at 12:21 pm
Sorry for Off-Topic-ing,
Could someone point me in the direction of finding out what the catches of the accelerated mortgage programs were?
I seem to recall a discussion a while back where it was claimed that in New Zealand or UK or somewhere that these mortgages were under scrutiny - but I can’t remember why.

Definitely not off topic. Someone else answered but I thought I could add something. There was a silly offer 'basically a useless scam' where banks for a fee would offer to save you 8 years off of a typical mortgage by redesigning you payment plan to be 1 payment every 4 weeks instead of every month. The principle reduction does knock the term down, but the responder correctly noted that they charge a fee for this 'service' which is ridiculous because you can always add additional principle reduction to your regular payment. Depending on your comfort level take the amount of an extra mortgage payment, multiply it by 2 and then divide it by 12. Add that amount to your monthly mortgage and you have just done it yourself for free. If you know how to use Excel try amortizing the loan on it, and play around with increasing your payment on your own. You will see the balance reaches zero further up the list. When you get it to reach 0 at the point that you wish, that is what your payment should be. Otherwise just post the numbers on a thread and I or someone else will be happy to crunch the numbers for you.

Because southern California is the greatest place in the country to live.

Malcom,

Back in the late 80's/early 90's I was on a bi-weekly payment program. There was no charge. Of course they really didn't have the technology to support that kind of payment platform at the time. It was a "o.k" deal.

What you're talking about though is exactly WHY most Americans won't make add'l payments. When we attempt to do this ourselves, we do the right thing with our tax return and apply it toward our house and then the transmission falls out of our car! (Or at least we "fear" that will happen). Anyway, the b/l is that next month your lender will be expecting a full and regular payment. Mortgage acceleration is something altogether different. Some sites have pretty advanced calculators and allow for a lot of variables. Have some fun and Google it.

Person,

Exactly. I listen to Clark but I can't say I heard that one! I'll take it a step further. A friend's CPA (CPA no less) was within a few years of paying off his 30 yr. so he called the lender and they told him, uh... no. Actually we have your payoff scheduled 3 months/payments later. But..bu?

Seems he didn't take into account the trivial differences in mailing in the payment and the time it actually posts into the account, SO......

Of all the english speaking countries we have the WORST relationships w/our lenders. Bar none.

http://www.nytimes.com/2007/03/18/realestate/18cov.html?pagewanted=all

"they are putting up most of the money to help her buy a two-bedroom penthouse apartment in Williamsburg, Brooklyn, for $900,000...They said that they wanted to help their three daughters equally. They had already bought their daughter Monisha, 29, an apartment on the Upper West Side, but when she married, she needed a larger place. They have told their third daughter, Pia, 23, that they will help her in the future. "

Where does NYT find these people?

astrid posts a clip from the NYT that Says:

> “they are putting up most of the money to help her buy
> a two-bedroom penthouse apartment in Williamsburg,
> Brooklyn, for $900,000…

Then says:

> Where does NYT find these people?

It’s probably the same crowd that sends in the wedding announcements with stuff like “Chip was a starting lacrosse player all four years at Andover”…

Soon after I turned 16 a friend in Palo Alto told me that the widow of a Stanford professor down the street from him was selling his clean ’72 BMW 2002tii for $4K.

I asked my parents if I could borrow $1,200 to buy the car and pay them back $100 a month with interest. They gave me a long lecture about debt and told me that only idiots borrow money to buy cars.

That was the one and only time I ever asked my parents to borrow money. I ended up buying a Datsun 510 and saving money so I had enough to pay cash for a 2002 my senior year (it was not a tii or as nice as the one I wanted to buy at 16).

You could live in a real mansion in Buffalo and fly JetBlue to NYC every weekend for the rest of your life, staying at a nice hotel, and still come out better than buying.

For a lot of people in NY, money doesn't matter. There was a great article in the NY Times a few weeks ago about how a lot of buildings in Manhattan are now half empty - because they're third or fourth homes. (Doormen are outraged - less tips!)

That's one of the things that drives me bonkers when people cite SF real estate as being the next NY.

Uh... no.

There are rich people in SF.
There are wealthy people in NY. That's the difference.

I wrote about that in this entry recently:

http://www.burbed.com/2007/03/18/what-silicon-valley-needs-to-do-to-beat-ny/

Everyone has an angle to make money from the barrios to the skyline glass offices without making any tangible products.

Um... how is that different than anywhere else?

There was a silly offer ‘basically a useless scam’ where banks for a fee would offer to save you 8 years off of a typical mortgage by redesigning you payment plan to be 1 payment every 4 weeks instead of every month.

Actually what I was talking about is a lot more sophisticated than that. It's not simply a pay-more-often thing, but rather a scheme that involves a HELOC.

Top 10 U-Haul Destinations For 2006

Why are people so eager to move to LA? Still!

Actually, it doesn't tell you where they are coming from, it could mean that many are coming from another part of LA. This could be a bunch of renters who have left their apartment to find a better deal.

Oh noes... we've fallen down the list!

http://www.housingtracker.net/affordability/?sort=pct-income

City, State Affordability Percent Income Mortgage/Rent Price/Income Price/Rent
Los Angeles, California 62 1.7 10.4 335
San Diego, California 53 1.7 8.9 343
Oakland, California 52 1.9 8.7 393
Santa Ana, California 52 1.7 8.8 346
Honolulu, Hawaii 51 1.8 8.7 353
New York, New York 50 1.6 8.4 323
San Francisco, California 47 1.9 8 393
San Jose, California 46 2 7.8 406
Miami, Florida 45 1.4 7.6 280
Riverside, California 42 1.6 7.1 314
Tacoma, Washington 36 1.5 6.1 293
Fort Lauderdale, Florida 35 1.4 6 280
West Palm Beach, Florida 33 1.4 5.7 280
Barnstable Town, Massachusetts 33 1.5 5.6 312
Sacramento, California 33 1.2 5.6 248
Las Vegas, Nevada 32 1.3 5.4 262
Reno, Nevada 31 1.2 5.3 245
Atlantic City, New Jersey 31 1.3 5.3 268
Nassau, New York 30 1.5 5.2 307
Sarasota, Florida 30 1.4 5.2 286

We used to be really at the top - now we're further down below. Where has our specialness gone!

http://www.paperdinero.com/CSI.aspx

Neeto chart making widget based on Case/Shiller data.

DinOR Says:
I think the thread was:
Mortgage Acceleration? (Freedom or Bunk?)
Or something like that?
DS alluded to there being “some problem” with them in AU but didn’t have any specifics IIRC.

My earliest post alluded to there being some problem, and then I reseaerched it and put copious specifics down as to why there were problems both in Oz and US. Claire put up a better deal in the UK. It's well worth looking up tat old thread for the details.

Patrick is going to try to put a google site search thingy on the blog pages, at our behest. I'll see what's slowing him down... ;)

In short, the biggest problems were that they usually charged higher interest and also possibly higher fees, with excuses about there being 'more transactions to process'. A misleading calculator was put forward which implied the same interest rate between loan types when in fact the so-called 'mortgage accelerator' rate was higher. This was the case in both US and Oz, altho Claire showed a UK loan which was fair by charging the same interest rate. In US and Oz tho, you would be worse off. Better off making more frequent payments.

They are a HELOC type thing also, where you deposit all your salary againt the mortgage and live off a credit card or similar.

Neeto chart making widget based on Case/Shiller data.
As they say, "a picture is worth a thousand words". How do you find these excellent toys? I was going cross-eyed looking at the S&P C/S Index Excel spreadsheet. The LA chart is priceless (still waiting for Miami to fall...)

I don’t think a nuke will be set off. More probably, they will wait till they have many nukes in many cities, then set them all off at once.

I see, yes. I think I saw this on a documentary on telly last week called '24'. Then it was followed by another documentary called 'X-Files' or something similar sounding... It's amazing what's going on out there right under our noses... But how do the producers of those documentaries get all those close-ups of people's reactions, and always seem to be at the right place at the right time?

Maybe if we got over a century of king-making and expediency in the Middle East and using them as an instrumentality with little improvement in their material quality of life things might get better also...

otherside says:
PAR, this is a follow-up to our argument of a few months ago about the value of leverage in real-estate versus in your investment portfolio… Bottom line: For real estate, leverage helps you on the way up but does not penalize you that much on the way down (“non-recourse loans” as FAB put it or “million dollar call with no premium” as I put it)

1. The avg. down payment in CA is around 9% on a $550k+ median priced home. So let's say the average is $50k down. Not sure how this qualifies as "no premium" but I presume you suggest that we all buy houses with zero down?

2. I'm no foreclosure expert but I'm pretty sure non-recourse applies to primary residence. Plenty of funny money in dumped into the vacation and rental property markets, but we can ignore that segment and pretend as though it's a different "market" if you like.

3. I will allow that some people won't give a flying rat's ass about their credit, especially NINJA loan holders. I think you overestimate the prevalence of this flippant attitude and disregard for obligation, but this is speculation on my part.

Let's assume that you're right about all this. A Bay Area house is just a million dollar call option with zero premium. Let's say the expiration day arrives and your option didn't hit the strike price. The option is now worthless and, according to your theory, you walk away and suffer no consequences.

In this simple world where everyone who owns a home is just a gambler, nobody suffers any losses and we all continue to get rich so long as easy money keeps pouring in and pumping up values. But in the real world, values are declining and the options are starting to expire. And when your neighbor whistles up to the mailbox and cheerily mails in his keys, values in the whole neighborhood drop.

If your theory of the million dollar call option is valid, now that the liquidity spigot is drying up, properties should start to be dumped with reckless abandon, flooding the market with inventory and completely hammering prices. I never realized what a great case you've been making all along for the speculative fervor that's driven this bubble to it's current heights, but I do now. Thanks for that.

Emerging markets are where the growth in the world economy is going to be the next 50 years. If you are younger than 50, you need to have some of your 401k invested there, unless you want to retire poor.

I just put about 5% of my 401k into Vietnam. It is really hard to find a fund that focuses on it, but my broker finally found one.

I am sure there will be gyrations on the way there, probably more gyrations than most who post here would be able to stand, but I am confident that it will turn out to be a great investment in the long run.

PAR

There are so many things wrong with her "free (no premium) million dollar call option" theory that it's almost futile to deconstruct it.

This is what you get when investment bankers drop out to become realtors, I guess. Smart enough to be dangerous. I'll bet that even on this blog forum, her arm waving has convinced at least one person that we're the fools and she knows what she's talking about. All the fancy financial words, and stuff.

"No premium". lol. Yes, that's right. There are big, free, million dollar options lying around on the street, and you get to live in a brand new McMansion to boot! But we're just all tooooo stoooopid to get it.

Jimbo, didn't the Economist just call a bubble in Vietnam?

http://tinyurl.com/yvk8gc

Muggy,

Nah. "Ms. Agrawal says the couches will be moving with her...she said while seated in a SoHo cafe during a break from her job, working in the promotions department at an independent music label. It’s not like me having furniture I like will depreciate the value of the house.'"' The girl is a walking cliche, albeit a very cute one.

Emerging markets are where the growth in the world economy is going to be the next 50 years. If you are younger than 50, you need to have some of your 401k invested there, unless you want to retire poor.

They look too good to be true.

I will not bet on any country without ICBMs. Russia is a possible choice, but it is a jungle out there.

On the other hand, instead of investing on something promising, why not betting against something shitty?

Not investment advice

Its not just the Google stock options that are distorting the local real estate market. They are extending their tentacles to a neighborhood near you. :-)
There are signs that Google's shuttles could be affecting -- albeit
in small ways -- the region's housing market.
When Adam Klein, a 24-year-old software engineer, moved to San
Francisco in 2005 to take a job at Google, he looked for a rental
apartment within a 15-minute walk of a shuttle stop. His walk to the
Civic Center stop turned out to be a bit longer. "I didn't take into
account the hills," Mr. Klein said. Many of his friends are moving
close to other shuttle stops. "Those stops have attracted people," he
said.
The area surrounding one of the shuttle's Pacific Heights stops had
a dozen or so Googlers living nearby in 2005. That number has surged
to more than 60.
Published Saturday, March 10, 2007, by the New York Times
http://groups.yahoo.com/group/BATN/message/34083

Person,

Therein lies the advantage of being a regular listener! When you've seen first hand as a CPA or planner great examples of how *not to do things it's exciting at first! The challenge of turning someone's situation around. After awhile? It starts to wear on you.

DS is right in one regard. The int. IS higher! However b/c they've structured your loans in a way that has them paid off in 7-10 years the effective int. rate is closer to 2.75-3.0%. I'm still learning and attending regular training on-line, in a classroom and working case studies. It's complicated, but do-able.

DS? I have affirmation that the Maquarie Calculator "assumes" every dollar not specifically budgeted for utilities, entertainment etc. is applied to the mortgage (in some cases) giving some pretty outrageous results! "You mean I can pay my home off in 3 years?" Well... uh... it's "possible".

Like most fin. planning calcs it's best to be honest about your lifestyle and expectations rather than "create" the person we wish we were?

The Buyer's Market in SF is over! says this commenter on my blog:

http://www.burbed.com/2007/03/15/sales-tumbling-demand-to-pick-up/#comment-7322

Danielle Says:
March 19th, 2007 at 5:23 pm e
The market seems to be so different, even within the Bay Area….

Looking at your own micro-market is so important. At my company, Zephyr Real Estate, we are reporting 2/3 of properties being sold now with multiple offers and for over the asking price! It’s been like this since about mid-February…

Inventory is very low right now which is causing the return of the seller’s market here in San Francisco.

I, too, yearn for more listings to emerge. As noted on my BLOG at http://blog.sfhotlist.com, if you believe the local papers, you are in for a real surprise. This is no longer a buyer’s market, at least not here in the city. It was notably slower last quarter…

Personally, folks should worry less about timing the market perfectly and more about making smart choices for their own financial situation.

Egad... where's the inventory!

In San Jose, HousingTracker shows this:
03/19/2007 3,663
03/12/2007 4,577

(I hope that's a mistake!!)

In SF, HousingTracker shows this:
03/19/2007 11,406
03/12/2007 11,520

This is totally not what I expected.

Argh, please unmoderate my last post about the sudden return of the seller's market