patrick.net

sybrib says

cloud13,

some of them probably are in hock up to their eyeballs,

But many of them are not. .

and I'm saying exactly the opposite of that , there are only very few who really well off but most of them are really screwed and waiting for things to get better for them.

Speaking of corporate acquisitions (3PAR, above):

Intel buying McAfee for 7.x billion is just mind boggling. Really stupid, if you ask me.

But perhaps there is a clever plan behind it all. Most AntiVirus software is a huge consumer of CPU cycles, churning through the hard disk looking for real and imagined threats, and setting off false alarms left and right. In this picture, what is not to like for Intel, who would be happy to sell you more CPU cycles, at a price.

Sometimes I think Antivirus software is more security theatre than anything else. Sort of like some of the airport TSA screening procedures.

..."Those who chose option (c) will not be purchasing another home for five to seven years."

I wouldn't be too concerned about tomorrow's personal credit judgement day or being shut out of the mortgage market due to a exit decision taken today. The mounting pressure on the economy to breathe correctly, due to propping an economy up on policy, ensures they'll need you more than you need them.

"More Price Stabalization in Bay Area (Worried calls to 1170-AM radio station)"

Back a few years, 2006 or 07, Michael Finney, on KGO 81 stated SF (City) home prices have never fallen. Wrong then Wrong now... many of these radio people just havent a clue. They are in one industry disconnected from all other major industries.

Common Sense says

I wouldn’t be too concerned about tomorrow’s personal credit judgement day or being shut out of the mortgage market due to a exit decision taken today. The mounting pressure on the economy to breathe correctly, due to propping an economy up on policy, ensures they’ll need you more than you need them.

Dude(fist pound)

thomas, I remember hearing Michael Finney say all that crap too. During the same weekends I would hear Bob Brinker parse his words very precisely so as never to say that house prices were too high, though anyone listening between the lines would understand his point.
I also remember lots of radio ads for real estate, mortgage services, etc. during those broadcasts. Not disconnected industry, but too well connected industry (connected to advertisers).

define fortress: it seems to get smaller and smaller. If by Atherton, Hillborough etc then yeah I agree (Although there also a few well publicized foreclosures in areas of the same caliber)

Concord is definitely not fortress. (although its pretty well crashed so the downside is not as bad as say, Mountain View, RWC, or San Mateo)

Nope, Concord is not the Fortress. (Nor is the part of San Jose where I live). The Fortress is ya'know, those places where the house prices are still high like some of the ones you mentioned, because of the supply and the demand. It is an abstraction also including similar such neighborhoods in the other big city areas along the coast (Nomograph mentioned, for example, La Jolla).

sybrib says

The Fortress is very small, someone on this thread even proved my point about the kinds of people buying here, one of them was SFAce talking about his father in law and the other one was someone else who’s college professor parent employed servants waiting on them.

If the bold letter words are about me, you grossly misunderstood my point. I don't think you comprehended what I said.

sybrib says

Nope, Concord is not the Fortress. (Nor is the part of San Jose where I live). The Fortress is ya’know, those places where the house prices are still high like some of the ones you mentioned, because of the supply and the demand. It is an abstraction also including similar such neighborhoods in the other big city areas along the coast (Nomograph mentioned, for example, La Jolla).

Good to know that the in 2010 the closest Fortress Area from bay area is La Jolla. :)

sybrib, you say you are a housing skeptic but everything else you post contradict that. By the way the subject we are talking about is "Price Stabilization in the BAY AREA", not "price stabilization in FORTRESS AREAS." First you argue "foreigners are going to prop prices up", then you say you agree that Concord and San Jose are no fortresses. Well guess what, San Jose is in the Bay Area.

Just a couple years ago, the entire northern California was considered "Fortress", then it shrunk down to just the "Bay Area", then it shrunk down to "Desirable places in the Bay Area, now people are arguing over which Neighborhood in select towns are "Fortress". Seems like there's no such things as fortress when it keeps collapsing on itself.

A fortress dessribes something that is barrier by forces where people are protected. In the context of war, it may be a moat, with high walls. In the context of housing, high prices keep people out.

Where are the places where prices are so high that your average citizen are excluded. In the North, Tiburon, Salsuilito. In San Francisco, they would be districts such as Marina, Pac Heights, Presedio, and areas around the hill manor. In the peninsula, I consider Hillbobough, Atherton, Los Altos (hills), Palo Alto, Menlo Park, and most parts of Burlingame with lots of semi fortress like Cupertino. In the eastbay, I consider Berkeley Hills, Lamorinda, areas of Pleasanton, Danville as fortress.

The fact of the matter is households living in single family home in these areas are extremely small. They may represent about 100K household. the bay area has 2.5M+ household which makes the fortress just 4% of the entire stock. There may another 250K properties that may be considered semi-fortress making the stock 10-15%.

Over time, bad place gets worst and good place gets better. this is especially apparent in a wide diverse of people who are on welfare, works at Low paying job yet there is a substantial pop who are rich and makes more than 250k. The gap between prime and non-prime locations always follow.

The rich has not gotten poorer, poor and portions of middle class people has gotten poor. The unemployment rate for 100K employees are around 2%-3%, the unemployment rate for the non-degrees are close to 20%. Wealthy foreigners are more wealthy comparable to a few years ago because real estate and stocks are outpacing those in the US and as their currency is strenhthening vs. the US dollar. There are more millionaires now than ever.

Some 10-15% of the transaction are foreignors, CA is the #2 state as far as foreign transaction and asians make up 45% of CA transactions. There is a fair amount of transaction from foreignors buying prime properties. That doesn't mean they are overwelming the transaction front, it means they own more than ever, slowly

That doesn't mean prime properties are not declining, just stating some observations.

Define foreign transactions and site the sources of your statistics sf ace

SF Ace,

thank you for helping me out there. I am lousy at making a cogent delivery of the notion, but you did an excellent job of it.

Are you looking for more clients in your business?

My friend whose networth might be close to $3-$4 million USD back home in india has not been paying his mortage from last 16 months and trying to get a loan modification by doing so. And how much is planning to save , prolly close to $100 or $150K. My point is no matter how rich some one is , no one throws away the money. So the whole idea of rich foreigners always available in continuous supply to buy shacks in Fortess area is simply laughable.

Cloud,

I see you emphasize my point. Yet another wealthy immigrant Fortress homeowner. Who can blame him? The modification he is trying for is setting the floor for Fortress prices, that's what makes it a "Fortress".

"Dude(fist pound)"

Please don't mistake truth as a prophesy of doom. Although I'm sure many of our current economic pains will ease as we get closer to the corrective surgery in November, our housing woes are just getting started. Until Barney Frank, his lover (Fannie Mae exec at the time), Chris Dodd and anyone else who helped manipulate the housing market by annihilating equilibrium through manufacturing "virtual" buyers, are brought to the gallows...I'll sound the warning. What's worse is Barney Frank and many others sat back in glee as an equitable number of homes were built to match this otherwise severely ineligible buyer pool and as the horrendous 100% LTV loan programs were quickly designed in order to match the two up. Although we now have healing conservatism reigning in the buyer issue, the massive surplus of home inventories remain throughout the country. Please don't shoot the messenger.

By correcting a false 4+4=12 to 4+4=8, don't expect it to equal 12 again. A correction is a correction. Keep your eye on inventory; who has it, how much is there, and what are their plans. The smartest of money will most likely not buy until these questions are answered and successfully verified.

I think Mr cloud's point is that even millionaires want a loan mod because values have fallen below his loan amount so even if they have money they are considering walking away.
Hardly supporting the theory that they are propping up prices.

I happen to be looking at recent Cupertino transactions. The foreigner theory seems to be working.
I suppose it just takes a few AAPL or NFLX employees to keep the comps in the area.;)

22262 Bitter Oak Street, $595,000, 07-23-10, 959 SF, 2 BR, Y. Nagano to A. Ghayoumi; 2006:$580,000
10578 East Estates Drive, $1,100,500, 07-21-10, 1,738 SF, 3 BR, R. Duvvuri to S. & P. Gupta; 1997:$442,500
10655 Flora Vista Avenue, $1,850,000, 07-27-10, 3,749 SF, 4 BR, T. Phan to Y. Chen; 2006:$1,035,000
22891 Longdown Road, $796,000, 07-23-10, 1,727 SF, 3 BR, Arora Trust to S. Krishnamoorthy; 2003:$565,000
7818 Lunar Court, $1,150,000, 07-21-10, 1,421 SF, 3 BR, P. Chung to T. Wang
22025 McClellan Road, $775,000, 07-22-10, 1,404 SF, 2 BR, Constant Trust to R. Tsai; 1990:$312,000
10465 Moretti Drive, $693,000, 07-27-10, 1,078 SF, 3 BR, D. Morgan to Chang Trust; 2000:$439,000
10418 South Tantau Avenue, $725,000, 07-22-10, 1,284 SF, 3 BR, George Trust to L. & S. Mukkavilli
20655 Sunrise Drive, $1,427,000, 07-27-10, 2,899 SF, 3 BR, M. Pellow to Z. Yang; 1976:$54,000
20320 Town Center Lane #833, $980,000, 07-27-10, 2,002 SF, 4 BR, S. Cheung to H. Yang
10872 Via Sorrento, $1,130,000, 07-21-10, 2,356 SF, 5 BR, H. & C. Masumoto to J. Tang; 1996:$497,000

all that is is a few transactions with names. its not data.

how is that supporting that foreign money will prop up the bay area?

Yes there are a ton of immigrants in Cupertino, we all know that by driving down Wolfe Rd... hence the foreign names,...yes prices are still higher then it was in the late 90s and early 2000s, prices are still too high like we all know....

where is the data showing money coming in from China and India? Where is the data showing the percentage of homes bought with cash (or high down payment, or lack of Alt-A arms)? where's the data showing buyer income that is on par with house prices?

Serpentor,

Chill out. No matter how affluent someone may be, there's always gonna someone with more. No matter how hard we may work or sacrifice to achieve a modest middle class situation or whatever, there's always gonna someone who was lucky and got more.

That is the great thing about the American Dream. Successfully achieving The American Dream can be something as simple as being accepted for coming out of the closet, or being a fundamentalist religion person, or sharing a camping trip to Lassen with kids, or having a fulfilling life in the service of others.

It does not have to be calling a MacMansion in the high API score enrollment Fortress areas home. If some folks like jobcat listed can just "buy" their material American Dream, we don't need to be so resentful that we may not get some schadenfreude over it.

I'm not resentful, I just don't like it when people make things out of thin air to support their own theories. I'm sick of people who don't understand others culture making up things just to delude themselves about their own poor investments.

Give me data. I would love to be convinced as long as the data is there. show me the numbers from reliable sources.

I'm all about the achieving the American dream.. Hell, the life story of my family is all about the American Dream. What's happened in the last 10 years is not the American Dream. When you buy something you can't afford with other people's money, when you commit financial suicide to keep up with the Changs and Wangs is not the American Dream. When you mortgage your future and live paycheck to paycheck is not the American Dream.

SF ace says

In the peninsula, I consider Hillbobough, Atherton, Los Altos (hills), Palo Alto, Menlo Park, and most parts of Burlingame with lots of semi fortress like Cupertino.

1415 SAN RAYMUNDO Rd: 2007 purchase price $3.2M, listed now $2.75M (6 months in market)

420 W Poplar Ave: 2006 purchase price $2.6M, listed now $2.3M (6 months in market)

510 W Poplar Ave: 2007 purchase price $2.2M, listed now $1.7M (100+ days in market)

413 HILLSBOROUGH Blvd: 2008 purchase price $2.5M, listed now $2.3M (75+ days in market)

I guess those foreigners missed these above addresses while searching MLS. Can someone find a Chinese or Indian who drives fancy car, sends kids to private piano lesson, visits native country every year? Just give him above addresses. He will snap up those properties with his "wealth". ;)

sybrib says

I see you emphasize my point. Yet another wealthy immigrant Fortress homeowner. Who can blame him? The modification he is trying for is setting the floor for Fortress prices, that’s what makes it a “Fortress”.

LOL! Excellent reasoning! Now I know whom to ignore. :/

P2D2 says

SF ace says

In the peninsula, I consider Hillbobough, Atherton, Los Altos (hills), Palo Alto, Menlo Park, and most parts of Burlingame with lots of semi fortress like Cupertino.

1415 SAN RAYMUNDO Rd: 2007 purchase price $3.2M, listed now $2.75M (6 months in market)
420 W Poplar Ave: 2006 purchase price $2.6M, listed now $2.3M (6 months in market)
510 W Poplar Ave: 2007 purchase price $2.2M, listed now $1.7M (100+ days in market)
413 HILLSBOROUGH Blvd: 2008 purchase price $2.5M, listed now $2.3M (75+ days in market)
I guess those foreigners missed these above addresses while searching MLS. Can someone find a Chinese or Indian who drives fancy car, sends kids to private piano lesson, visits native country every year? Just give him above addresses. He will snap up those properties with his “wealth”.

yep. fortress. Someone call call Shanghai, there are some great deals! LOL

http://maps.google.com/maps?f=q&source=s_q&hl=en&geocode=&q=cupertino&mrt=realestate&sll=37.322998,-122.032182&sspn=0.139241,0.295258&gl=us&ie=UTF8&ei=Y9NwTP_VFKb6tgPauvnHBg&attrid=ee6d68e1e5cb9843_&ll=37.317615,-122.039394&spn=0.066212,0.147629&z=13

all these Foreclosures on Google Maps in Cupertino must not be owned by rich Foreigners.

Serpentor says

all that is is a few transactions with names. its not data.
how is that supporting that foreign money will prop up the bay area?
...

All right. I just don't have Nomo's skillz to be sarcastic without spelling it out.
I was trying to cross the rich immigrant & tech stock options theories together.

Serpentor says

Give me data. I would love to be convinced as long as the data is there. show me the numbers from reliable sources.
I’m all about the achieving the American dream.. Hell, the life story of my family is all about the American Dream. What’s happened in the last 10 years is not the American Dream. When you buy something you can’t afford with other people’s money, when you commit financial suicide to keep up with the Changs and Wangs is not the American Dream. When you mortgage your future and live paycheck to paycheck is not the American Dream.

The question regarding "foreigners" comes from demographics analysis back in early part of the last decade. Such names as Gomez, Tran and Nguyen were cited in the analysis.

Frankly if you lived in the South Bay, or any part of California, long enough, you would already recongnize such names dating back to the 70s and 80s. Also considering we saw many folks leave Iran and Hong Kong and settle in CA back in early years of 80s and 90s didnt have a impact on prices.

Being a foreign buyer, no matter how impressive their wealth may be, does not make them immune to making bad RE purchases. At the end of the day, its all propaganda driven by Realtors. No one believes, "Buy now or be priced out forever" so the REIC spins it as "Buy now or the rich foreigner will buy it."

Expensive Euro car? like time before him... expensive Pu$$y magnet. Thats a question of misquided hormones...

babe magnet?

That young guy is married though. Usually its more like the ones in my stage of life (late 40's) who will buy a babe magnet car while (for the time being at least) still in commitment with their original spouse. ("mid life crisis").

Could be you're right though. Everyone's an individual.

LOL! I have an old Alpha Spyder which i picked up for $3K. Restored to cherry red.
Love the way the young ladies ogle over it, cars got class ... old mans fantasy never hurts!

Sybrib, one thing I've noticed about the newly "middle-classed" mainland Chinese is that they seems to have all but forgotten about the traditional Chinese values of modesty and virtue. For many its all about crude display of wealth and the appearances of being better off then you. (unlike the previous generations of immigrants from China, HK & Taiwan who tend to be modestly dressed, live frugally, drive old Toyotas, but yet now own multiple properties and have multi-million dollar bank accounts.) The news reports of women in China openly ask their suiters if then own their own car and house are true and a sad result of the combination of destruction of traditional values by the communists during the cultural revolution and the recent rapid conversion from communism to corrupt version of consumerism.

thomas.wong1986 says

LOL! I have an old Alpha Spyder which i picked up for $3K. Restored to cherry red.

Love the way the young ladies ogle over it, cars got class … old mans fantasy never hurts!

Nice, I love inexpensive old school sports cars.. I prefer the old Lotus Elans myself. Telepathic handling, great revving old motor and the best shifting transmission I've ever felt on an old car.. its not as sexy as the Alphas but for me its all about the driving experience. Despite having a multi-million fleet of cars, the lowly Elan (a good one is about the price of a new Civic) is Jay Leno's favorite driver.

P2D2 thanks for excellent posts, with a little Indian spice :-)

Serp- Brit cars are nice as well, i agree. A nice present for yourself and a overall great hobby to have.

In the eastbay, I consider Berkeley Hills, Lamorinda, areas of Pleasanton, Danville as fortress.
Fortress Eastbay is BAP (Berkeley, Albany, Piedmont and those places 'on the other side of the hills'). The schools help support the prices... and yes, Fortress EB has taken some hits as of late.

To emphasize the point already made, it's the parcel tax haves vs. the parcel tax have nots:
In the Contra Costa County city of Orinda, one-third of the school district's budget consists of parcel tax proceeds and local fundraising — more than 10 times the state average. With that cushion, the elementary school district has been able to preserve its 20-to-1 class sizes and avoid teacher layoffs.
Class sizes will stay small in Berkeley schools, too, thanks to parcel tax revenue; local funds make up 27 percent of the district's budget.
"Berkeley has a model right now that continues to work, even during these tough times," said Superintendent Bill Huyett. He added, "So far, we've been able to weather the storm without losing too much."
See: http://www.mercurynews.com/breaking-news/ci_15617811?nclick_check=1

Thomas - Nice car. Alfa Spiders are lots of fun.
Regarding foreigners - There's plenty of immigrants buying Fortress houses. However I don't subscribe to the foreign money theory. The immigrants that I know buying these places came here as students, then worked here and saved to get into these places. I don't know anyone who brought money to buy such a house. So still it's immigrants, but with money made here, not in the homeland.

Having said that - the Atherton prices cited above will look very cheap to a Shanghai resident. A single family house there with 3000 sq ft and 4000 sq ft lot is at least $1.5m and probably more. (Of course there's not many SFHs, the vast majority of people live in apartments or condos). And, the land is a 70 year lease, not freehold. Does this mean that foreign money will prop up the bubble? Probably not, but it's still cheaper than a Shanghai SFH.

By the way, for some reason, the Great Firewall of China allowed me to see this website, but did not allow me to post. Curious.