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LOL! eburbed said
"Well back then they were still making more land and it wasn’t special."
Actually again, many did say that land was limited back many years/decades. Nothing new.
However, I never heard anyone boast about this area before as we hear today. I often ask, who are these idiots?
Take DinORs, comments...'homes will actually continue'... yea right... Many peoples jobs will be moved elsewhere if this continues.
Randy H
2007 Mar 22, 7:43am
FAB
Numerous thanks. Does a first TD $amount mean the amount owed to lender or the amount owned by buyer? Should I read this that the guy took a $1.3m loan?
Space_Acer,
Isn't it funny that when money is expensive there's no great sense of urgency to build. Yet when money is cheap WE'RE RUNNING OUT OF LAND! (Oh and every place becomes "more special")
We dont need to build more homes,
There is no shortage of housing.
Because we dont need to hire more
people, however if the current workforce
continues to become more expensive
where employers are unable to create
a profit will force them to seek lower cost
workers elsewhere. At the end of the day,
its all about the numbers.
Its no accident that we have programers working
for feed by local employers in China/India.
Just like the textile/auto industry we too
in SV have matured.
speedingpullet,
The SF Zoo is in the Outer Parkside and it is one of San Francisco's more affordable neighborhoods. Of course these things are all relative, but you can get a pretty nice home for ~$700k there. This is probably the cheapest area in The City that is not crime ridden. It is very foggy, though.
My wife who grew up here in the Bay Area always said, the weather is very nice, the landscape is beautiful, but not that this price.
The funny thing is, sometimes we meet these new immigrants or out-of-state migrants who just came to the Bay Area just a few years ago explaining to my wife why BA is so special and the housing price well justified. She is like, oh really? Thanks for the enlightenment.
Isn’t it funny that when money is expensive there’s no great sense of urgency to build. Yet when money is cheap WE’RE RUNNING OUT OF LAND! (Oh and every place becomes “more specialâ€)
Exactly! Since they aren't going to be giving money out as easily as they were you can now say:
"Buyers, they're not making any more of them!"
"Sell now, while you still can or you'll be priced in forever"
OO -
Both funny, sad and very dangerous... Maybe someone needs to explain to them the deflationary nature of the local tech economy, what makes it grow and what will destroy it.
Randy H
2007 Mar 22, 9:01am
The funny thing is, sometimes we meet these new immigrants or out-of-state migrants who just came to the Bay Area just a few years ago explaining to my wife why BA is so special and the housing price well justified.
Although clearly current house prices are not justified, natives of the BA and other "prime" areas often take their environs for granted. Having grown up in the Midwest I will argue with anyone that there is, and should be a premium for the BA and other great areas of the world.
...I await the requisite "teh bay area suxorz" replies, keeping in mind that 99% of those folks wouldn't survive 2 months living where I grew up.
Peter P
2007 Mar 22, 9:03am
I await the requisite “teh bay area suxorz†replies, keeping in mind that 99% of those folks wouldn’t survive 2 months living where I grew up.
teh wolrd sux.
Randy H
2007 Mar 22, 9:04am
Dorcas
So I don’t mean to seem rude just posting out of nowhere, but I hardly ever post anything on any blog I read
If only that were the extent of "rudeness" that sometimes passes around here. Seriously, everyone is welcome to post. No need to be shy, it's just a blog after all :)
I await the requisite “teh bay area suxorz†replies, keeping in mind that 99% of those folks wouldn’t survive 2 months living where I grew up.
The Bay Area really does do a good job of producing people who can't live anywhere else.
A few years ago I met a guy who had just returned from a 4 month stint in Houston (consultant). He said he couldn't wait to get back here because it wasn't diverse there.
(But what he really meant was "It isn't 30.2% Asian there".)
I also met someone who did a stint in Boston. She couldn't wait to move back because it was too cold and gloomy there.
Go fig, maybe this is the most perfect place in the world. :(
Peter P
2007 Mar 22, 9:14am
I also met someone who did a stint in Boston. She couldn’t wait to move back because it was too cold and gloomy there.
What about Chowdah and raw littleneck clams?
Malcolm
2007 Mar 22, 9:19am
I just came from an auction where a 1 million dollar home which needed some serious work just sold for 1.155 million. There are still some suckers out there.
Peter P
2007 Mar 22, 9:22am
Auction is a form of psychological manipulation. You need to be very detached to be successful. If any participant has any "passion" about the object, game is over.
Malcolm
2007 Mar 22, 9:26am
Randy H Says:
> Question for experts:
> What does it mean when a homes sells and
> is recorded twice in the same day.
This is a situation where a speculator put a deposit down on a lot and found a buyer before the project was even finished. This is a classic flip.
Randy -
"I will argue with anyone that there is, and should be a premium for the BA and other great areas of the world."
And who do you expect will to pay you a salary so you can in turn pay premium $$ for housing. We are not like other great areas of the world, our economy is pegged to deflationary products we make. We are in short more Walmart in many ways.
Eburb writes'
"The Bay Area really does do a good job of producing people who can’t live anywhere else."
Well now as you may know, only 1/3 of Natives still live in California. Many are actually living in Utah, Or, Wash, Tx and Nevada.
I know many who I grew up started to move outofstate starting in the 80s and into 90's.... Did BA fail them?
On a BWOnline artifcle, they wrote about rent:
"In general, price trends in the apartment sector are inversely related to those in the housing market. When home prices increase, as they did between 2001 and 2005, rental rates decrease. After the price runup, which made homeownership unaffordable to many, renting became a better option and rates skyrocketed."
Does this make any sense? Wouldn't an increase in house prices increase underlying rent as it is the way owners extract value from their asset?
Peter You said
"Auction is a form of psychological manipulation"
Do you prefer your realtor to tell you...
"There are other bidders, Can you go 10% above asking?
And you ask "What are the other bids and who are the bidders?"
To which they reply... "I dont know, look do you want this or not"
..Trust but verify...Nice Jedi Mind Trick... I hope you really trust your realtor and really believe he isnt ripping you off. Trust me its happening every day.
Peter P
2007 Mar 22, 9:36am
Does this make any sense? Wouldn’t an increase in house prices increase underlying rent as it is the way owners extract value from their asset?
Renting and purchasing are alternatives to each other. On the other hand, asset pricing is driven primarily by expectations of future pricing. Here we have an interesting interaction between the two.
Peter P
2007 Mar 22, 9:39am
Do you prefer your realtor to tell you…
“There are other bidders, Can you go 10% above asking?
People can tell me anything. I listen to my inner voice. (And my astrologers.)
Trust me, auctions can be brutal. This is why I will only use Buy It Now at eBay.
sfbubblebuyer
2007 Mar 22, 9:41am
You can't force rents higher because your mortgage is high. With a bunch of new houses going up and people buying houses, the number of people renting decreased, lowering demand, thus lowering prices. You'll see the occasional FB trying to rent a 3/2 for enough to cover his PITI, but they won't be able to rent them out for that, and quickly drop down to close to 'market' rate. It slows the hemmoraging of cash.
Rents dropped because a lot of people left the BA after the dot com crash, and there was much more rental space than was necessary. With people buying all the new housing going up, even fewer rentals were required. With the speculators now trying to rent out their properties, I doubt we'll see much of an increase in rent even as the foreclosures start the shove FBs back into the rental market.
If a lot of speculators and FBs manage to hang on to their homes through the next ten years, we may see the 'golden' era of renting here in the BA... Housing stagnant, but rents not rising either.
Home prices from 1998 to today have been artifically inflated by number of factors. Rentals were inflated in 1997-2000 due to shortage of housing,
hwoever once demand for workers declined so did rental prices.
I quick note... Back in 1991-93
Home prices fell,
Rental cost fell,
Interest Rates fell.
In 1990 the workforce of SV was around 850K, todays its the same number if not less. So demand for housing has been flat for 15+ years.
Today home prices however have gone up 400% in 10 years...
never has this happened before in history.
"Here we have an interesting interaction between the two."
Peter, I would say we have an interesting "Divergence" of the two...
Just like the Divergence of NASD new economy and Dow old economy.
One went to the moon while the other did so so... we are no where near 10,000 on the NASD Y2K peak... we may never see that in our life time again.
Does a first TD $amount mean the amount owed to lender or the amount owned by buyer? Should I read this that the guy took a $1.3m loan?
Yes---buyer put $600K down and took out a $1.3M loan.
SFBubbleBuyer, what was interesting was back in 2000-2001, with all that vacancy for Commercial space the landlords (based in LA) didnt want to lower the rent from 3/sq ft... They often said, the BA will snap back... well we may be back... but in no way could a local company afford $3 per sq ft. The norm today is around 1-1.33/sq ft. thats 2/3 down since 2000.
Peter P
2007 Mar 22, 9:53am
Peter, I would say we have an interesting “Divergence†of the two…
But the two compete for occupants (and specuvestors). When everybody runs for purchases, the demand for rentals drops. This is how they interact.
"I listen to my inner voice. (And my astrologers.)"
Yes im shure the Realtors help out with that too...
It only takes a few to pepper the area with fake bidders a
and force others in the market to the new paradigm.
You wonder if the realtors ever took their ques from OPEC...
Nice monoply they have on setting prices... Not an shed of light
on true values to the public. I just cant wait for the RE industry to get slamed with what Accountants have to deal with --- SOX legislation.
they are already talking about it in Congress...
Malcolm
2007 Mar 22, 10:01am
Peter P Says:
March 22nd, 2007 at 4:36 pm
Does this make any sense? Wouldn’t an increase in house prices increase underlying rent as it is the way owners extract value from their asset?
Renting and purchasing are alternatives to each other. On the other hand, asset pricing is driven primarily by expectations of future pricing. Here we have an interesting interaction between the two.
The disconnect between the two is the bubble. IMO it is actually reversed, increasing rents should mean the home's value has increased. A bunch of FBs though are going to disagree.
Thanks CB,
Some of my coworkers sold their home ... in each case it was the same... one offer only (which was accepted) and the only offer was 5-10% above asking. What gives!!! 10% above asking and only one offer? The sellers didnt care! Which is understandable! If I was the buyer, well now....
"At the same time, open house activities appear to be picking up. Could this be the start of a considerable spring bounce?"
Corporate accountants/FPA may look at this and say, Maybe backend loaded... borrowing from March sales. That may no look rosey when March numbers are reported...
Yea so many similarities like the software-internet equity bubble of 2000-2001. (what many call the dot.com)
"The disconnect between the two is the bubble. IMO it is actually reversed, increasing rents should mean the home’s value has increased."
You could add to that "wage inflation" as we saw in the 1970s. Some on CNBC are talking about stagflation returning.
Peter P
2007 Mar 22, 10:17am
The disconnect between the two is the bubble.
Yes. In fact, the disconnect happens because asset pricing depends primarily on expectations but rent pricing is all about now.
OK, I saw the weirdest foreclosure on propertyshark.com.
269 271 Collins St, SF
bought on 8/17/1990 for $3000
bought on 5/21/1990 for $170,000
in foreclosure now with $2,312,831.14 unpaid.
What is this?
@Space_Acer,
Perhaps the people who bought your co-worker's house readthis article before making their offer.
Peter P
2007 Mar 22, 10:22am
Perhaps people are just too serious about competitions.
The one thing better than winning competitions is winning without competitions.
If you have to compete, you are doing the wrong thing at the wrong time.
Space_Acer Says:
> Today home prices however have gone up 400%
> in 10 years…never has this happened before in history.
An earlier post mentioned that it is due to the fact that they are not making any more land...
Hello Harm -
As many old timers I spoke to would say it has been normal in the past to offer below asking (lowball). Somewhere in between is the actual. This has been true for decades... I researched this out...
I visit open houses today and been told "we expect multiple bids"
I still see those homes on the market 3 months later or pulled.
My favorite bits:
A Tough Fact of Life
In the Northeast and Washington, D.C., regions, many parts of California and other desirable real-estate markets, competing against multiple buyers -- sometimes known as an overbid situation -- is a difficult fact of life. Learning what to offer is part science, part intuition, say Realtors. "With a market that's still extremely hot, it's the only way to be successful," says Linnette Edwards, an associate broker who specializes in San Francisco's East Bay area for ZipRealty Inc., an online real-estate company based in Emeryville, Calif.
She and other real-estate brokers offer these tips to help you fashion offers that outshine others on properties you want:
...If other homes like the one you want sold for $50,000 over the asking price, "you want to bid to that highest dollar amount," says Stephanie Vitacco, a realtor with Coldwell Banker Residential Brokerage in California's San Fernando Valley..."
Research the sellers. Find out how motivated they are to sell and whether they want to buy another home. In this case, you might be able to make your bid more attractive by offering such concessions in your bid as allowing them to stay in your home for free -- also known as a "free rent-back"...
Factor in the number of other buyers making offers. The more bids being made, the higher the final price will go. Typically, competitive bidding raises prices by 5% to 20%, with 10 or more offers generating the highest amounts.
Write a letter to the seller. "Don't discount the emotional factor," says Ms. Edwards. One way to set yourself apart is to write what she calls a "love letter" to the seller describing yourself and your partner and children, if you have them, and why you want the house. You might even include pictures your children have drawn of the home.
Ms. Grove and Ms. Wells included a photo from their wedding and described themselves in a personal letter to the owner of the home they wanted in San Rafael. Although they didn't get the property, such letters often work because they set potential buyers apart and make the transaction less about money, says Ms. Edwards. "It sounds cheesy, but it does work," she says. "The cheesier the better."
...Bid an odd-numbered amount. Most buyers typically offer a round number, such as $400,000 or $405,000 on a home selling for $395,000. Try to determine the highest amount you believe other bidders will offer. Then if you bid an uneven amount that's slightly higher, say $407,250, you may outbid the highest round-numbered offer and win the property, says Ms. Vitacco.
...Make your offer as clean as possible. Try to remove every factor in your offer that might deter a seller. Include the highest cash escrow and down payments you can afford and as much as possible of the remaining payment in cash. If you need financing, secure a letter from your lender stating that you have been approved for the loan. Eliminate as many contingencies as possible; offer to have the property inspected quickly and to pay local closing costs, such as special taxes; and be ready to close as soon as possible. Don't ask for any appliances or fixtures that the owner wants and be sure to offer special assistance the owner might need, such as a free rent-back clause.
...Formulate the final number yourself, with guidance from your broker. "You can't expect your broker to tell you what to bid," she says. "I try to lead buyers to a reasonable conclusion, but I hesitate to put numbers in other people's mouths."
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There appears to be a significant drop in inventory on listing sites. At the same time, open house activities appear to be picking up. Could this be the start of a considerable spring bounce? What is going on?
Perhaps we need to brace for some impact.
[Note: This observation has not been confirmed by most participants of this blog. Please do not be alarmed.]
Peter P