patrick.net

RobertShiller says

For all the deflationists out there, can someone explain to me why the UN, Russia and China are working to remove the US dollar as the world reserve currency???? If we are going to have massive deflation (and not inflation), wouldn’t that mean that the US dollar and T-Bills are going to be very strong? Why would they want to get rid of the US dollar if it’s very strong and stable?

It's all relative, really. Can you explain why they have been unsuccessful to remove the dollar?
Wasn't it just last week the Euro was broke and was plummeting, as the dollar was shooting up?
In just one short day, someone gave lip service and the whole thing turned around.

Or why the market was cratering the end of last week up until yesterday, then presto whamm-o We're back!

How in the hell does that magic happen?

"The nation's debt leapt $166 billion in a single day last week, the third-largest increase in U.S. history, and it comes at a time when Congress is balking over higher spending and debt has become a key policy battleground.

The one-day increase for June 30 totaled $165,931,038,264.30 - bigger than the entire annual deficit for fiscal year 2007 and larger than the $140 billion in savings the new health care bill will produce over its first 10 years. The figure works out to nearly $1,500 for every U.S. household, or more than 10 times the median daily household income."

China might own us, but WE are the Euro and the DOW.

The Dow would be lucky to be 1200 points since '07, if our politicians weren't hell bent on emptying our treasury to make all of the 401k'ers feel warm and fuzzy inside.

m1ckey6 says

I know this market well and at least another $100k needs to come off the price if you want to even try and compete with units that are actually selling in San Jose.

I mentioned this a little bit earlier as well. I don't mean to be a pessimist, but of course there will be no demand for a $275k condo that's worth $150k. You will need to be at The 88 building or something, above the Marketplace supermarket to have that kind of price for a 1 bedroom.

I understand walking away is currently not an option for you because it is implanted in your mind that you have about $65k equity. But it's time to face it that your equity is lost, underwater. Even if someone were to pay $275k for your condo, and didn't care about the fact that he is over paying, a bank will not loan them much more than $100k for your property.

But since you do not seem financially troubled, you may as well just rent this out silently, or just remain seated.

SF ace says

Thomas, that was old news when 600K jobs are lost monthly over 18 months or so, 2010 is a little different. Headcount dump is mostly over and 2010 will be raise year. My spouse got 15% recently vs. 3% last year.

She works in a CPA firm if i recall right? Thats a partnership correct ?

Tenouncetrout, That was pointless, you avoided my question.

thomas.wong1986 says

SF ace says

Thomas, that was old news when 600K jobs are lost monthly over 18 months or so, 2010 is a little different. Headcount dump is mostly over and 2010 will be raise year. My spouse got 15% recently vs. 3% last year.

She works in a CPA firm if i recall right? Thats a partnership correct ?

Correct the partners certainly didn't take a pay cut as well, we have pretty good visibility on pay plans through client service work. I know some will get more and some will get less, but 2010 will not be a paycut year. Most will expect modest raise.

SF ace says

Correct the partners certainly didn’t take a pay cut as well, we have pretty good visibility on pay plans through client service work. I know some will get more and some will get less, but 2010 will not be a paycut year. Most will expect modest raise.

She is in a sweet spot working for a partnership but not everyone works in a partnership which provides much needed and required services. Its much different world in the corporate offices when we talk about trimming budgets/comps, and thats what we are still seeing. Her firm may well have better pricing power to allow some increases.

Do not buy again, at least for a few more years. Seriously, why are you so ready to throw even more money away? Housing prices are still historically too high. (See numerous purchase price to yearly income charts). A 20% downpayment today, in my opinion, is immediately lost on closing, and your are probably signing up for another short sale.

Many posters are right - young kids don't need a room, and don't take up much space until they start having all the crap that they don't need. More likely, you and the wife need the kid to have a room, and that's a legitimate, but not immediate, need.

Fire your realtor - if he's never seen a tough market, he doesn't have enough experience and isn't worth paying 6%. Short sell your condo, no matter how low. The ding to your credit is the same whether the short sale is a modest discount, or a huge one.

The future belongs to renters.

Because citing Russia and China's desire to ditch the Dollar(which they can't) as proof we're heading to massive inflation. Is as pointless as debating Marijuana legalization in this country. It's a fuzzy topic but it will never happen. On a Federal level.

We never actually grew our way out of the Tech crash and ultimate recession, we just created debt. Which the majority of will never be paid back. To top it off our government gave the banks mulligans in Trillions, so the bad debt is not on their balance sheets.
Hell we never even got out of this recession, much less acknowledged its still in full force and has been for almost three straight years.

There's hundreds of trillions of dollars that have been printed in the last two years and pumped into the banks.

While more than 80% of Real Estate deals have been cash deals.

There's a lot of money there's no stress on the money supply, even with the lack of employment.

Every commodity across the board is cheaper today than it was 2007, other than GOLD.
Which was artificially ran up to $1200 levels SOLEY!(and this is important) based on the Inflation/Hyperinflation Theorists, which has yet to come into fruition.

Gold has stalled at the $1200 mark, and coincides in the ramp up of "SELL YOUR GOLD" commercials.

Gold will be back at $300 an oz again long before the rest of the world ditches the dollar.

Oh and my dollar that was 1.58 against the Euro in '07, is at $1.26, and if the Government didn't print a couple hundred more Trillion last week, it would still be at 1.21 where it was, and well on it's way to 1:1 against the Euro.

I guess the answer to your question is, and thankfully so... "Cooler heads wont let them."

Tenouncetrout - you should run for senate and show Ron Paul that he has no idea what's he's talking about
http://www.youtube.com/watch?v=EhYfm4f7PXQ

E-man says

@ SF ace, pkennedy and Hooch,
Therapy bought this condo for $324k. He put 20% of his own money down, $65k, and an additional $30k (interest free) from the City of San Jose, totaling $95k. After paying for almost 2 years. he now owes about $225k on the loan. So here is the math with some round up numbers.
$225 loan + $30k CSJ debt + $15k transaction costs to sell = $270k. This is how he came up with his asking price of $275k, and would likely accept an offer of $265k.
The problem is this condo will not sell for that price. It would likely won’t comp’ed out. This is the reason why he can’t walkaway from this condo because he owes only $225k on it. That was why I said he has no other option than hanging onto this condo.
@ therapy,
Please tell us if E-man is wrong. Your silence means that E-man is correct. That was why I believe you’ve explored all avenues and didn’t like the results. I can help you get creative to dump this condo, but it would still won’t comp’ed out due to the market.

You're pretty much right on the money, except that I'm privately employed and don't work for the government in any way.

Interestingly, I was just told something somewhat interesting by my city loan representative. She said that the city acts as a "silent second" (ie - they never report data to the credit agencies, which explains why that $30k never showed up on any credit report), and that they accept short sales frequently, and never report the short sale to credit agencies.

Which means that I could short sale that $30k second (as long as the ~$220k first is satisfied fully) and have no adverse effects on my credit.

I understand some of your comments about credit cards, but I had bad credit for a long time in my early and mid 20s. It took me a few years to fix it, and I've built up my score again by being responsible. I know how difficult it can be to do things without good credit. (getting a cell phone, a cable bill, buying a new car, having a card with a balance big enough for emergencies, etc)

I'm never going to punish my credit rating again.

My decision is to leave the house on the market for the rest of the year, and if it sells, fine. If not, fine.

I'm able to make the payments (quite easily now that we're a dual income household), and the baby will be fine there for a while.

Hey there therapy:

Check out used office furniture stores for a small office partition for your baby's space. Just one section is all you'll need, however, if you want, go for the curved end unit so it semi-wraps around your baby's space.
Gives a separation between you and him/her plus the benefit of noise absorption.
The fiberglass partitions by Steelcase or Pleon are the best.

You can tuck decorator fabric into the partition and make it fit in with your decor.

Your baby will get used to sleeping through noise. You can also use a playpen and do double-duty with it as a bed plus playspace. I rec also getting an Elfa storage bin on casters plus a bin for toys.

As long as you maintain adult/family space in your unit, you'll do OK.

~Misstrial

Way to go therapy. Sounds like you've thought through some of the options. Best of luck to you.

RobertShiller says

For all the deflationists out there, can someone explain to me why the UN, Russia and China are working to remove the US dollar as the world reserve currency???? If we are going to have massive deflation (and not inflation), wouldn’t that mean that the US dollar and T-Bills are going to be very strong? Why would they want to get rid of the US dollar if it’s very strong and stable?

Russia, China concern is more about risk of default and the uncertainty around US monetary policy based on 3 years of exploding deficits. Even the IMF is now concerned and issued a warning tonight. The commodity currencies (CAD, Aus, NZ) at least have something tangible to back them up. China is being incredibly smart in turning all those (increasingly worthless) Treasuries into hard assets - buying up and stock piling commodities, foreign ports and railroads, mines all over the world, developing African partnerships, even buying Greek islands. It is rather frightening to think where we'll be 10 years from now - controlled by China? Basically they already own us, if they were to call in all Treasuries the US would be hooped. But I digress, this is supposed to be a forum about housing issues...

it sounds like you have plenty of time. Wait a year and see how the market is doing. If it tanks then walk away if it recovers sell.

Easy.

Therapy,

I'm in a similar situation to yours except mine is worse in terms of money loss. I'm 27 and my husband is 29, he bought the Santa Clara, Ca condo in his name in 06' at the peak of the market for $305k and $330 hoa dues, 670 sq ft (much smaller than yours), much older than yours (a pos in my opinion, we put a little elbow greece in to make it a bit nicer) we do have three pools though but that is it! We make enough money to support our mortgage so we do not qualify for any federal government short sales or help. We want to get pregnant but know that we can't until we get ourselves out of this situation. I don't think 670sq ft is enough room to have a baby since it's barely enough room for my husband and our small dog. We got married last year and had to purchase a storage space for all of our wedding gifts. Zillow says our home would sell for $229k, however a real estate agent in the area said we would be lucky to get 200k. That would completely wipe out all of our savings and maybe even more than what we have saved in the bank. He also said our property may sit on the market for over a year at $200k. I personally want to walk away, but it's my husbands credit score not mine and he refuses to do so.

It certainly is a shitty time for people who were responsible and did not buy over their heads!!! I don't know what the answer is for us and am not sure what the answer is for you either.

Since you will only lose 20k I would say get the heck out now, since properties will continue to lose for a while in my opinion. For us if we only lost 20k we would do it but over 100k is way too much of a hit.

We spoke to our bank and they would not do anything for us in terms of a short sale. You might considering pleaing with them to see what they can do for you since your financial picture changes with a child.

Please post when you have made your decision! Good luck.

My opinion in all of this from all of the reading I have done on the current housing market/economy is that property values will take at least 10 years to go back up to the prices they were at in the peak. For us we can have a tenant but we would have to cover at least 1k of the mortgage each month until we could sell the property for what we purchased. I also think that is crazy, how can we survive giving up 1k a month?

I was in exact same situation except I put almost $300k down in my case.
I was single when I bought my place then I got married and had a baby.
We tried to ride out for three years but the price just kept falling and I believe it is falling further.
I tried to modify the loan to keep the place and renting it out but bank won't give me modification that would work for me. They were saying our income is too high.... So our family decided to walk. Now the property has no equity, perhaps a little bit under the market price.

Now we are renting much bigger and nicer place for the 1/3 less than what I used to pay!
We are happy. I lost big chunk of money but hey, I gained family!

Condohelp:

For you, if you really want a child, then the dog would have to go.

You'd have to get creative and hang a bassinet from the ceiling (sorry, but believe it or not, we had to consider this as an option since we had 2 toddlers and one newborn in a rental that was 750 sq ft) - raising and lowering it with pulleys (spouse is an engineer).

Happily, we found a rental that was 1250 sq ft. Heaven.

~Misstrial

"So obviously, one of you groups of people are going to look really dumb in a few years. Heh."

Yeah like you do now.

Misstrial, I don't know how you did that. I'm not yet that desperate for a baby, but in about a year I will be :).

Misstrial says

Condohelp:

For you, if you really want a child, then the dog would have to go.

I could never understand that kind of thinking - pets SHOULD be treated as long term obligations. Ours is a member of the family. He's not disposable when another priority comes in to play.

Yeah, I figure we are about 30-40k+ under water (we owe 260k on a completely rebuilt 1950s bungalow in an area where slight fixers are selling for 200-210k). Our total PITI is within a couple hundred of what one would pay in rent in a unremodeled slight fixer in the neighborhood without any deductions. It's frustrating, this is not the house we want to be in for the next 5-10 years but oh well. Compared to the rest of the world we are living in the lap of comfort and luxury in our 1000sf. Yeah, we "need" a bigger garage since we have motorcycles and my husband is a mechanic. Yeah, we "need" a second toilet, or a bathroom big enough for 2 people to stand in and brush their teeth! But hey...heat, running water and all that!

I think your options are stay or walk. There wont be a better time to do so if you decided to bail..

klarek says

“So obviously, one of you groups of people are going to look really dumb in a few years. Heh.”
Yeah like you do now.

Yeah, I thought that was pretty obvious by my post.

Thanks for clearing that up, though.

Liz Pendens says

Misstrial says

Condohelp:
For you, if you really want a child, then the dog would have to go.

I could never understand that kind of thinking - pets SHOULD be treated as long term obligations. Ours is a member of the family. He’s not disposable when another priority comes in to play.

Liz Pendens:

The key words here are "For you...." For the poster who lives in a 800+/- sq ft residence, having space concerns for a new wanted and desired member of the household was the main consideration.

Having lived this and not just randomly throwing out suggestions was my motivator.
Having a pet and a baby in a very small space was just not practical for us or possibly for other parents.

I appreciate your views though...

~Misstrial

@ Misstrial:

The key words here are "... then the dog would have to go."

So it sounds like you chose to give your dog up when it unwittingly became - well, impractical and second fiddle. I hope it found a good home.

Liz Pendens says

@ Misstrial:
The key words here are “… then the dog would have to go.”
So it sounds like you chose to give your dog up when it unwittingly became - well, impractical and second fiddle. I hope it found a good home.

Well I suppose what someone chooses to do with their life is their business.

I personally do not equate a pet with a human baby, although apparently you do.
I respect your views, I hope that someday you will respect mine.

~Misstrial

Liz Pendens says

pets SHOULD be treated as long term obligations

nah. They live for the moment. Their only importance in this world is what you (or somebody else) invests in them.

Putting a pet down is No Big Deal in the scheme of things.

Off subject a bit... but I thought I would vent. I'm just amazed on how I realize many people believe that the economy is not as bad as it actually is. Like we are in a "recession" and not a "depression". Or saying things are getting better. Some people actually say they don’t watch the news or want to know what is going on, because it’s too stressful and rather be in their own bubble of illusions (my boss). People are in denial. It seems like most can’t see more than 2’ from their face or don’t want to. They always think that someone else will “fix” all the problems and everything will be OK. Meanwhile, their jobs are taken / necessities are getting more expensive / and everywhere you turn you realize things are getting worse instead of getting better. These same people complain later about how stressed they are as a result of these problems without connecting the dots and really speaking out. Greed, stupidity, ignorance, & complacency are all in one pot, and it’s like a mob happy to drink the Cool Aide inside it.

lillybee62002 says

Off subject a bit… but I thought I would vent. I’m just amazed on how I realize many people believe that the economy is not as bad as it actually is. Like we are in a “recession” and not a “depression”. Or saying things are getting better. Some people actually say they don’t watch the news or want to know what is going on, because it’s too stressful and rather be in their own bubble of illusions (my boss). People are in denial. It seems like most can’t see more than 2’ from their face or don’t want to. They always think that someone else will “fix” all the problems and everything will be OK. Meanwhile, their jobs are taken / necessities are getting more expensive / and everywhere you turn you realize things are getting worse instead of getting better. These same people complain later about how stressed they are as a result of these problems without connecting the dots and really speaking out. Greed, stupidity, ignorance, & complacency are all in one pot, and it’s like a mob happy to drink the Cool Aide inside it.

I hear ya. Lebron and Lohan is more important than the BP spill for most people. It's disgusting.

I found this on the drudgereport.com
http://www.youtube.com/watch?v=3B_xBWsDpz0

lillybee62002 says

Or saying things are getting better.

No offense, but I think you need to look in a mirror. Things have been getting better for about the last 6 months or so. There is no denying that.

Now, they have gotten only marginally better from a very low point and it's unclear if they will continue to improve or not. But calling people delusional for saying things are improving is just plain wrong.

I agree completely with your point.

I guess people who are in their 20's and live in the Bay Area should really think twice about buying a "starter condo." A starter house is generally a bad idea because you pay a ton of interest and fees to live somewhere for a couple of years, but a starter condo is even worse.

Well, this whole thread has been an interesting read.
I am out here in Roseville, outside of SacTown. Condo prices have already fallen 60-70% of their sale price in 06.
1100 sf 2bd 2ba are going for 100k-120K range now...sold in the 250K-300K 4-5 yrs ago. these are units that were constructed in the early 2000's...so still relatively new...HOA's in 170/200 range

I have about 200K+ to invest, and am scouring this area, seriously considering buying two of these for income, 100% cash, no mortgage. Rentals for these are in the 1000/1200 range, so looking at annual return of 8% after taxes/hoa stuff...

But you people are scaring the hell outta me now with the predictions of another 2-4 years of price drops. Seems to me they can't get much lower than 30% of peak value! ( most of these at this price are REO's ).

IMHO the bay area is still way overpriced, but out here we are near or have hit the bottom........

i just shake my head when i see 300K+ and 300+ HOA for 800sf..........

that guy with the RV idea sure looks appealing after looking at those numbers...

Liz and Misstrial,

No one worry, we would never give up our dog!!! He is a member of the family.

If that's the complex by Mid Town, I'd either walk or if I insisted on not walking, sell out and take the loss. That big complex has all of the disadvantages of high density living, but none of the advantages; like a desirable/walkable neighborhood, or being steps away from the light rail or Caltrain, nor walking distance to any university; nor in the enrollment area for an elite public school. It doesn't even offer the benefit of walking distance from the old Saddle Rack after a night of slamming down tequilas (being as how I think they tore down that great old institution to build the new complex).

I have intentionally left "appreciation/depreciation" out of the equation. I am looking at a 10-15 year hold on these for income only. Unless of course another mini-bubble appears out of nowhere!! would be happy at the end of this period with the standard 3% annual appreciation that's harped all the time, but not keeping my fingers crossed..
then again, 100K to 130K does not sound like a huge jump for 2020 prices.....room to take a hit or two..

not really 'savvy' yet, but been scouring trulia, redfin, movoto, realtytrac, and blogs like this one for the past 6 weeks, gettin my feet wet..

edit: of course, i will get the 'depreciation' tax advantage every year....

not looking in sactown, in roseville/rocklin area....

xrpb11a,

I'm sort of at the same stage as you but gotta get over the hump of learning how to set up having my IRA buy a place. At the moment it doesn't matter because in the neighborhoods that I know around here the prices don't pencil out with the rents yet. But that may change in the coming years.

gotta do something....can't depend on SS or medicare, no one's got the acorns to legislate the fix to keep it all above water...so create the cash cows while 'the gettin's good', and hope the 'gettin' doesn't git better in a year or two lest what you got is going in the gutter!

You should think a couple of steps ahead of where you are now. If you sell at a significant loss (which appears most likely) how will you purchase a home in the near future? $20,000 is a lot of money to lose and odds are that you'll lose even more just for the opportunity to buy in the near future.

With that said, where are you going to come up with a 10-20% down payment on the next property in less than 2 years? Wouldn't you want to spend your savings on a place to live instead of just the opportunity to buy in the near future?

I was in almost the exact same situation. I had a condo that I bought for 350k (2004) become worth 250K (2008) (and this was AFTER 26k in improvements). Long story short I stopped paying because I was forced to move 400 miles away due to a job relocation. Sinking my life savings into the place so I could "do what's right" seemed really stupid.

Doing "the right" thing is keeping your $$$ and taking care of your family. The Bank would NEVER let a negative asset sit on it's balance sheet, why should you? I think you're being conned when you say, " I know it may be costing me money, but I guess I was always raised in the whole “if you gave your word, you stick by it” tradition."

I never once missed a bill in my entire life but losing my life savings to "do what's right" is a load of shit. Do what's right for those closest to you, not some giant bank.

Few Questions:
Are ABSOLUTELY you sure you'd ONLY save $200 on renting? Know the EXACT amount

Note: your wifes credit is also completely separate from your own as long as only your name is on your papers.