patrick.net

I am sure politicians would like to change it too. The Democratic mantra in Sacremento is "we need more revenue not budget cuts."

Here's an idea for the Sac Politicians. Cut the enterprise zone credit.

When downtown San Francisco is considered an enterprise zone and lawyers, bankers and controllers who work within those skyscrapers are considered "eligible" based on where they live like SOMA, something about that credit is terribly wrong. It is extremely lucrative too, not some 1K per employee, it is worth up to 36K per qualified employee.

"The EZ program has been one of the more expensive of the state's many economic development programs, costing the state treasury about a half-billion dollars a year and thus contributing to its chronic budget deficits."

Read more: http://www.sacbee.com/2010/06/29/2856142/dan-walters-fight-over-californias.html#ixzz0sHvdf0Oq

I personally prefer eliminating rather useless sections of govermment like the the bridge authorities, CAL EPA, and Cal FDA. I am sure there are a hoard of other redundant functions I do not even know about.

I just got a post card in the mail from a Realtor bragging about selling a house up the street in Sunnyvale, CA (94087, Heatherstone St. for those that keep track) for $751,000. Kinda funny though cause the listed price was $980,000 and was on the market for at least three months. I feel sorry for the buyers as you could rent a nearly identical house for less than $2,500 a month. I say less because there is a house for rent three blocks to the north on S. Mary Ave where they are trying to find renters and asking for that amount and it still hasn't been rented out.

I think the sellers made a good decision.

Sell now. Do not look back. Do not try to hold out for some fantasy sales figure. Sell NOW!

Ryan are you talking about this house? Looks like the original list price was 839k

http://www.zillow.com/homedetails/972-Heatherstone-Way-Sunnyvale-CA-94087/19538727_zpid/

I also noticed that there's hardly anything for sale
some redfin facts about that area:
inventory down 10% vs. April
inventory down 19% vs. last year
sale-to-list at 101%

I wouldn't count on prices falling there unless there's some shock to the system an earthquake may do it.

That's what 700k gets you in California? Wow I don't feel so bad spending $290k

newhomebuyer7 says

That’s what 700k gets you in California? Wow I don’t feel so bad spending $290k

BTW, a house at fox run looks way better than that 700K sunnyvale house.

Toothfairy: Yep, that's the place. I walk around the area and pick up the fliers, it was $980,000 in the beginning. I would hardly say there is no inventory in the area. One went up on S. Mary Ave. (closest cross street is Heatherstone St).I don't know if it is listed on MLS yet, but the asking price is $725,000. (I would say there is a price drop right there.) Not to mention, the other house on S. Mary that is closer to Fremont St. that has a "sale pending", the house on S. Mary close to Remington St. advertising a guest house, the other house on Heatherstone St. less than a block down from the one that just sold. I could go on.

I go check them out cause they are on my walking path and keep track of them. For example, there is another house close by that sold about a year ago for $780,000. The people are trying to sell it now for $789,000 (this one is not on MLS). So far they don't seem to be having any luck.

So, Toothfairy, I would not only count on prices falling further, but I'd say if the people who bought the place on Heatherstone would have waited, they could have got a better deal simply by pointing to the place on S. Mary that had an asking price of $725,000. Not sure how you determined area, but I look specifically at 94087. I measure by taking a walk through the neighborhood and dropping in at the open houses on weekends. Prices will continue go down though the pace of the fall may vary.

toothfairy says

I also noticed that there’s hardly anything for sale
some redfin facts about that area:
inventory down 10% vs. April
inventory down 19% vs. last year
sale-to-list at 101%

I wouldn’t count on prices falling there unless there’s some shock to the system an earthquake may do it.

Let's rewind back one year:

825 Nectarine Ave: October 2009 sale price $851K
967 Heatherstone Way: Much smaller sqft. November 2009 sale price $800K
859 Maranta Ave: September 2009 sale price $890K.
944 Cambridge Ave: July 2009 sale price $815K

Let's rewind back three years:
864 Orange Ave: Only 1040 sqft. September 2007 sale price $848K

Bottomline, 972 Heatherstone Way sold for $751K. Similar properties were sold for more than $800K. Prices are already falling without earthquake.

exactly why/when are you expecting a recovery?

ie. WHAT are you expecting to recover?

Ag is about the strongest player we've got:

http://www.nytimes.com/2010/06/29/business/media/29nuts.html

but it's hard for 2% of GDP to pull the entire train.

Troy says

exactly why/when are you expecting a recovery?

Well, GDP has been positive for last 3Qs, wages have been rising for 6 of last 7 months. I'd say we are in the midst of a recovery right now. We might double dip and go back into recession, but history shows that to be very rare.

This time might be different, but it usually isn't.

tatupu70 says

wages have been rising for 6 of last 7 months.

How is that exactly a good news? Doesn't high unemployment eventually results in wage growth because the labor pool becomes smaller and smaller, possibly with only skilled workers?

Just an example, the fire department in my city downsized, closed down two fire stations and virtually in hiring freeze. As a result, existing firemen are working overtime and getting paid overtime (and overtime means higher hourly rate). A classic case of wage growth. And it is happening everywhere.

tatupu,

I would not rely upon GDP reports. They are as manipulated as the CPI. Any gains in GDP will be erased by revisions moving forward.

inflection point says

tatupu,
I would not rely upon GDP reports. They are as manipulated as the CPI. Any gains in GDP will be erased by revisions moving forward.

Are you one of the shadowstats crowd? I don't buy into the conspiracy stuff. GDP and CPI are difficult to measure--government probably gets it wrong sometimes, but I don't think it's on purpose. Economists would figure it out pretty quickly...

tatupu70 says

I’d say we are in the midst of a recovery right now.

http://calculatedriskimages.blogspot.com/2010/07/weekly-initial-unemployment-claims-july.html

"Recovery" consists of returning the the worst of the tech recession!

This time might be different, but it usually isn’t.

Is this one of them there jobless recoveries? Who exactly is recovering?

Silicon Valley Wages Decline 14% Since Dot-Com Boom (Correct)
February 02, 2010, 5:52 PM EST

Even after the declines, Silicon Valley’s technology workers earned about 61 percent more than people in the same industry in the rest of the nation in 2008, according to the report.

So be careful regarding higher salaries, you may loose your job to another state.

Tatupu,

I would suggest the government finds it expediant to shape indices such as employment. I agree that it could be partially error, however them seem to make many errors.

just for the record I fully expect prices to soften going into the fall as they always do.

If prices go up into the fall then there is reason to worry (for the bears).

>If prices go up into the fall then there is reason to worry (for the bears).

wow 4 years of real estate weakness and we still have real estate bulls.
i guess some folks are slower than others.

no one is going to be "priced out forever".

prices aren't going to appreciate significantly any time soon until the economy and employment pick up.
and even then, i suspect, prices will be flat because of the massive glut of distressed properties and oversupply.

i dont think there are any Real Estate bulls left (another bad sign for the bears). Most people are either hardcore bears or slightly less bearish.

keep wishing for those prices to rise because that's the only place it's going to happen.

it doesn't effect me unless Im selling prices can go either way for all I care.
My main reason for wanting prices to rise is because it will lift the entire economy.

But I realize that for some folks here a good economy with low unemployment would probably be considered bad news.

Yes, really backward thinking. In fact the world has changed. Higher home prices will not lift the economy, it has the opposite effect and imped any any real economic growth.

Closer to home... captains of industry state the obvious ...

On The Record / Carl Guardino

Q: So are those really challenges?

A: Unequivocally, yes. Not only to the CEOs in the boardroom, but to any family you talk to in their living room. What we hear time after time from CEOs as well as frontline employees is how incredibly difficult it is to come here and stay here. That truly does have an impact on a company's bottom line when the cost differential is so much higher here than it is in other regions around the state, nation and globe, or the ability to recruit top talent is also impacted.

You mentioned housing. It probably is the top concern we hear about in Silicon Valley from both CEOs and employees in terms of local issues. Does that have an impact? Let me put a finer point on it.

Hewlett-Packard and Dell are the top two computer-makers in the world. Corporate headquarters for HP are located in Palo Alto and Dell is in Round Rock, Texas. Obviously, they both have people and facilities around the globe.

In those two communities where their corporate headquarters are and where a lot of research and development takes place, the median resale price for a home in Palo Alto is about $1.6 million. In Round Rock, Texas, it's about $180,000, except the home and property are bigger.

We hear from HP all the time that a huge deterrent to the ability to recruit and retain people anywhere near Silicon Valley is the housing issue. We don't hear that from Dell, which is also a member company, about their operations in Round Rock. It does continue to plague us and we will continue to sound the alarm.

falling prices create a revers wealth effect. It's bad for everyone including the economy. Some bears are short sighted and dont seem to get this. They only look at the price tag and think lower prices can only be a good thing, right?

toothfairy says

falling prices create a revers wealth effect. It’s bad for everyone including the economy. Some bears are short sighted and dont seem to get this.

What you don't seem to get is that the "wealth effect" of rising asset prices, without economic fundamentals to back up the rising prices are a false boost the economy , and will result in reverse wealth effect as the asset prices revert to what is supported by economic fundamentals, as they eventually must.

It's not that I'm cheering the "reverse wealth effect", and I doubt anybody else is. I just understand it's the inevitable outcome of a false debt fueled "wealth effect".

toothfairy says

Some bears are short sighted and dont seem to get this

I guess that counts every CEO/CFO and other business planners in the Bay Area.
Oh well! you will learn what many of us back in the 80s learned the hard way.

the denial by toothfairy smells distinctly christian/republican.

I don't understand how high prices help the economy, that means the buyer needs more money to allocate per month for mortgage and lesser for everything else (eatouts, concerts, travel, charity, anything else at all).
Bay Are would be full of stingy people soon , who would barely afford to pay their high mortgages in 2 families/per house ghetto neighborhoods.

mike4518 says

the denial by toothfairy smells distinctly christian/republican.

Are you inferring that Christian Republicans are the only people in denial that they were duped into believing the crock of Horse Shit that if they didn't buy in the height of the bubble, they would be priced out for ever?

Our country is so screwed! Greed is destroying this country and both political parties are being used as the proxy.

Liberal Democrats have become the biggest Zealots of all. Their religion is their party.

shrekgrinch says

ptiemann says
40% have been cash buyers off the MLS??
Are they from out-of-state?
I went to some Robert Allen seminar in Foster City a while back. They were trying to get us ‘rich’ Bay Areans to buy ‘cheap’ houses in Indianapolis to fix and flip. So, I’d say that is happening in other areas besides Indiana.

It's interesting that you mention Indiana. I guess this is the new place salespeople are pushing. There is a guy here in SoCal that has a one hour radio show on KABC in Los Angeles. He says that he lives in Orange, which is in Orange County, CA which is the town adjacent to Disneyland. I guess radio profits are down big time, because this 5000 watt station has mostly paid advertising each hour on Saturday and Sunday. They bumped Bob Brinker and the other local talk show hosts a few years ago and started running all infomericals. I wonder what these folks are paying for an hour of air time and the use of their regular phone number to call in and get registered for the seminars that are held at the station as well as an appointment to meet with this fellow or his "associates"? He does the show live by himself, but at the beginning and end of the show KABC says that it's a paid commercial announcement . He says that they only buy houses in Indianapolis, IN because of the low prices and high demand and then fix them up and there is already a tenant in place so there is nothing for the investor to do other than get your monthly check out of the mailbox. They have a management company set up that takes care of the 500 or so that they say have sold so you are "plugged into the system." When I listen to him tout the "15% cash on cash returns" and houses selling for peanuts compared to California prices, I have to wonder how the investor makes much money. By looking at the homes sold on their web site and the returns generated, it's like $200.00 or so a month. Personally, I don't find that worth my time and if a pipe freezes and breaks or a toilet plugs up, or any other problem arises, there goes the $200.00 profit for that month. These profits seem paltry for the risk involved. Also, I would be nervous buying rental property 2,000 miles away. I like my rental property within 10 miles. The web site is www.therealestateinvestinghour.com

Tenouncetrout says

mike4518 says

the denial by toothfairy smells distinctly christian/republican.

Are you inferring that Christian Republicans are the only people in denial that they were duped into believing the crock of Horse Shit that if they didn’t buy in the height of the bubble, they would be priced out for ever?

i did not infer any such thing.

i simply stated toothfairies particular type of denial smells familiar; which it does.

They're in denial about how bad things are, not necessarily the housing market or economy but because they know that the root of all this is the incompetence and corruption in our government, banks, and financial institutions.

If they admit that then they have to admit that at the very least we're pretty much fucked and we're looking at a long slow decline for the whole country over the next 10-20 years. I say very least because that is a realistic "optimistic" view of how things will pan out barring those previously mentioned parties suddenly becoming competent and not corrupt.

They'll probably suddenly stop posting like all the other bubble deniers did back in 08/07 when it became apparent how stupid they looked.

tts says

but because they know that the root of all this is the incompetence and corruption in our government, banks, and financial institutions

The source was at main street, your typical consumer created the bubble. Hype by the public drove prices well beyond any financial common sense. And the NAR, dope pusher!

I will give you an example.. The biggest Anti-Banker, Anti-Wall Street, Michael Moore, who also blams Wall Street and Banks for the bubble, was asked on CNBC a few months ago. 'Since you dont invest in Stocks and Bonds, where do you put savings into "'. Michael Moore's resonse was... 'I vest in my house.' A typical response you would have found in the past several years in many parts of the nation.

OK so Moore sinks in $50,000-100,000 in his new 'investment' the home he lives in middle America... now who in heck is going to be the buyer who will pony up the highly inflated selling price and return on his investment for his house ? Did everyone in his town get a raise to cover the higher prices he demands ? Wages and inflation certainly catch up!

Sounds like a Ponzi scheme to me, found in many typical main street towns!

Mr.Fantastic says

tatupu70 says

Well, GDP has been positive for last 3Qs, wages have been rising for 6 of last 7 months. I’d say we are in the midst of a recovery right now.

LOL
HAHAHAHA

Oh, I forgot. You don't measure recovery in real statistics such as GDP, consumer confidence, durable goods orders, etc... Hell, even the hiring index was at it's highest point in like 20 years. Something like 70% of the companies surveyed indicated they were likely to add workers next year.

But, in MF land, that's not the beginning of a recovery.

tatupu70 says

Housing did, in fact, go down when the housing credit ended. Like everyone expected. I imagine many people who were considering buying hurried to close before the credit ended, pulling forward a lot of demand.

This is exactly what many of us said would happen. Perma-bulls discounted it as having "little effect". I wonder how many consecutive months of declining home prices it will take before you guys get it.

The average salary for technology jobs was $103,850 in 2008, down from $120,064 in 2000, the agency said today.

$100k for a PhD engineer is not that high.

I wonder if it includes the skilled workers or technicians.