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Why Aren't You Talking About Real Estate?

By astrid following x   2007 May 29, 4:19am 2,839 views   14 comments   watch   sfw   quote     share    


Since we're experiencing a slow time at this blog, I thought it might be a good time to put up a thread to answer the occasional complaints about this blog's tendency to go off topic.

This way, whenever the complaint pops up, someone can simply link to this thread and then we can go on talking about the kind of knife to use with horse sashimi or the risk of terrorism in the greater Buffalo area.

astrid

#housing

1   sfbubblebuyer   ignore (1)   2007 May 29, 4:20am   ↑ like (0)   ↓ dislike (0)   quote   flag        

I'm not talking about it because I've convinced my wife we don't want to buy right now.

Now I'm talking about Bolivian Sock Puppets. She's bullish on them!

2   Peter P   ignore (0)   2007 May 29, 4:27am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Real estate talks are getting boring.

Perhaps we can talk about which is the prettiest places to live.

Much of the Bay Area is just plain ugly.

3   Randy H   ignore (0)   2007 May 29, 4:29am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Sorry to step on you Astrid. Didn't see your thread until after I published mine.

4   DinOR   ignore (0)   2007 May 29, 4:31am   ↑ like (0)   ↓ dislike (0)   quote   flag        

I remember the first time the U.S hosted World Cup Soccer. David Letterman did a schtick on how most Americans couldn't have cared less.

"You know Paul, no matter where I go and who I talk to.... virtually NOBODY is talking about the World Cup!"

Paul Schaeffer did his usual suck up routine as Dave introduces his "Top 10 List" on how to get people excited about soccer. Dave, buddy, the NAR could use you right now! :)

5   astrid   ignore (0)   2007 May 29, 4:33am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Randy H,

No problem. I anticipated that this would be a short, fairly purpose driven thread.

6   PAR   ignore (0)   2007 May 29, 4:53am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Glad you asked... I have not commented in a long time but this had little to do with the randomness of the conversations.

When I found this site, I had recently sold my home for reasons that most of you would understand. I was looking for affirmation. I found it here. Many of the posters take an unsentimental view of housing and actually consider the true costs and risks of taking the plunge. This is no small feat in the Bay Area where owning a home is next to godliness...

But over time, I just found that I didn't need as much affirmation. One year after selling my home, prices have done nothing. Up 1% or maybe down 1%. In any case, pretty flat. Sure, Atherton is "on fire" and Pinole is going down the tubes. But it gets boring to debate after some time. I still feel justified with my decision.

The second reason I don't comment much is that this train wreck is happening in slow motion. In the Bay Area, at least. It got exciting a few months back when lenders went belly-up by the day but it's back to slow motion again. The last bust took 7 years. And how did it "look"? Well, not terribly interesting. Flat prices for 7 straight years.

And that's how I think this one is going to play out. I think some houses will go up, some will go down, and in about 7 years we will all look back and say, "wow, housing was a pretty bad investment compared to _________." I could be wrong about the magnitude but I think I'm right about the pace and the duration.

Given that, what more can I add to the debate? It's like we're all watching a sloth climb a tree. We're very confident he can do it and every day he moves a couple more inches. So we find various ways to describe how awesome today's activity was. After a while though, it can be tedious.

So, I've decided to pick and choose my battles. I still check prices on ziprealty (weekly now, instead of daily). I still read this blog and I still monitor the news. I still peek at foreclosure stats. But if you're cheering for a big, fast, brutal Bay Area crash, I just don't think one is imminent here in "the fortress". I do think it's a horrible "investment" and won't get back in for a few years. But I don't have too much else to add to the conversation.

7   astrid   ignore (0)   2007 May 29, 5:02am   ↑ like (0)   ↓ dislike (0)   quote   flag        

PAR,

Hmmm, yes! Even very bright and savvy people are vulnerable to investment cherrypicking. After proper discount for transaction costs, the goal of a proper investor/saver is to maximize the likely future outcome. The ups and downs of the chart doesn't matter that much, only the final resting place/bottom line.

8   DinOR   ignore (0)   2007 May 29, 5:02am   ↑ like (0)   ↓ dislike (0)   quote   flag        

PAR,

Actually, you've pretty well sized it up! I agree, I don't lean on the affirmation nearly as much as I might have in the past so it leaves time to view other topics with like minded people. Even if we woke up tomorrow and the BA had lost HALF it's value over night where would you want to check first for the reaction?

These days it's getting almost as easy to get affirmation from friends or neighbors that are just now recognizing "things have slowed down" big time! The difference is, they didn't see it coming.

9   Peter P   ignore (0)   2007 May 29, 5:46am   ↑ like (0)   ↓ dislike (0)   quote   flag        

The ups and downs of the chart doesn’t matter that much, only the final resting place/bottom line.

NO! The chart matters because the investor will freak out in the middle and get out at the wrong time.

One must also optimize for his/her psychological well-being.

10   Randy H   ignore (0)   2007 May 29, 5:50am   ↑ like (0)   ↓ dislike (0)   quote   flag        

The funny thing is, not a single house we've looked at and considered putting in a "fair priced" offer on in Southern Marin hasn't already been reduced 10%+. Many homes are approaching 20% markdown from the initial listing price. Even more for those few I've watched go on & off over the past 2 years. Some of those are over 30% down.

I say the correction is well underway, it's just not going to show up in statistics for a while because of the product mix and sales volume changes.

I also say that most people will only recognize the correction *after* it's occurred. For reference, many people didn't embrace the early 90s drop in prices until the late 90s, well after prices had already started back up.

11   Peter P   ignore (0)   2007 May 29, 5:56am   ↑ like (0)   ↓ dislike (0)   quote   flag        

I also say that most people will only recognize the correction *after* it’s occurred.

Yes. Most people recognize only "facts" they like. It takes a lengthy denial cycle for them to see the truth.

12   PAR   ignore (0)   2007 May 29, 6:26am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Randy, yes, that's my point exactly. If you look hard enough, you definitely see bargains at the micro-level. At the macro-level, it's murkier. But I'm now very confident that the slide is happening. (Check out this post on craigslist: http://sfbay.craigslist.org/sfc/rfs/338727108.html)

It's been fascinating to watch things fall apart first in Phoenix and Sacramento (maybe 1.5 years ago), then in Napa/Sonoma (about a year ago), then in East Bay (starting last year) and then in pockets of Marin/SF/Peninsula (now).

The craigslist post is pretty telling. We all saw developers giving away swimming pools and granite counters in Sacramento in 2005-2006. Yesterday there was an article about a house selling at auction for 50% off it's original selling price.

When you see SOMA developers giving away cars, you know that it can't be that long before the train hits. Plenty of people are still standing around on the tracks though... I do think it'll take a few more years before it's common knowledge. Still cheap (dumb) money floating around. Stocks still climbing. LBOs still happening. China still lending. Etc.

13   PAR   ignore (0)   2007 May 29, 6:29am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Randy, yes, that's my point exactly. If you look hard enough, you definitely see bargains at the micro-level. At the macro-level, it's murkier. But I'm now very confident that the slide is happening. (Check out this post on craigslist: http://sfbay.craigslist.org/sfc/rfs/338727108.html)

It's been fascinating to watch things fall apart first in Phoenix and Sacramento (maybe 1.5 years ago), then in Napa/Sonoma (about a year ago), then in East Bay (starting last year) and then in pockets of Marin/SF/Peninsula (now).

The craigslist post is pretty telling. We all saw developers giving away swimming pools and granite counters in Sacramento in 2005-2006. Yesterday there was an article about a house selling at auction for 50% off it's original selling price.

When you see SOMA developers giving away cars, you know that it can't be that long before the train hits. Plenty of people are still standing around on the tracks though...

I do think it'll take a few more years before it's common knowledge. Still cheap (dumb) money floating around. Stocks still climbing. LBOs still happening. China still lending....

14   Malcolm   ignore (1)   2007 Jun 3, 7:31am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Test. Post not showing.





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