patrick.net

yeah in a span of one hours , numerous people called who had pans to short sell their present one before they move onto their new house. It is amazing how people are gaming the system at expense of tax payers.

it's interesting but these people need to live somewhere unless they're going back to india.

I think major price drops in places like Central Valley were a result of too many out of area buyers with no intention to actually live there. so the housing demand was artificial and builders overbuilt.

I am an Indian.
I know lot of my friends who bought in to the frenzy. See, we were 'schooled' that buying home/property is always a good idea.
There are lot of Indians who bought at peak in East-Bay / South Bay. Expect more.

Indians are savers, usually. But I know a lot, who got 'interest only' loans to get into a starter home in Santa-Clara for 700k :-)

I am an Asian and have many Asian friends. All the people I know who bought their homes between 2005-2008 are "stuck" in different ways in different levels - depending on where (city/neighborhood) they bought. And yes, some of them have variable rate mortgages. Some of them have second mortgages too. The wife in one of the families can't leave her job (she has a child now and she wants to quit) because they can neither sell their home nor afford current mortgage without both of them working.

Some of people made lots of money in last housing bubble. Some made some bad decisions too.

PPete says

The double dip started in June. Buckle up!

Just an ongoing correction in the works.

P2D2,

What you write does not jive with what I see.

So many recent immigrants with PhD's from elite US schools, driving late model cars, nice import models, sending their tots to Challenger and then later on Harker or some other elite school like that, or else paying an enormous premium for public schools with high standardized test scores, their college age kids going back east to private schools or the top tier UC's which are not cheap unless you're low-income enough for all the gov't help; private lessons, tutoring, sports camps, "Harker-school junkets" for panel discussion, Gunn High School trip to Provence for the summer, etc. for the kids; annual-ish trips "back home", often during holiday shutdowns when the fares are highest, trips to Tahoe for skiing, and often boasting about their savvy investments in stocks, or sharing about the losses they had no problem stomaching on other stock speculations.

These folks are my peers in the job market; I know +/- or so what those jobs pay and what one can afford: the only rational conclusion is that they are all very wealthy from family money "back home". The fewer number of such persons whom I know fairly well I also know for a fact are indeed from very wealthy family money "back home".

Roberto,

I am sure you know about the miracle of compounding.

At a relatively benign 5% year over year increase the market value of that 250K home would be about 750K to 800 K nowadays; that Solano home would be about 250K.

However, prices in late 80s went down by 30-40% in subsequent 5-6 years.
They were not sustainable! Its too easy to come up with 5% return, and call
it a safe estimate, yet like back than, there were many factors which played in.
The Japanese did wonders in the Bay Area killing off our growth and taking our
global market share. So much for the 5% solution!

Those were the days before the recent rise of the new wealthy elites in China and India. The typical Fortress buyer was a middle manager from Lockheed, not the rich kid of a rich family "back home" in Mumbai or Shanghai.

It's different this time.

sybrib says

Those were the days before the recent rise of the new wealthy elites in China and India. The typical Fortress buyer was a middle manager from Lockheed, not the rich kid of a rich family “back home” in Mumbai or Shanghai.
It’s different this time.

Is that what you think we had here in the 80s ? Just middle managers from Lockheed ?

I've been personally monitoring 95132 and milpitas area from last 2.5 years and from my experience one can get better homes for the same amount of money. This weekend i decided to see all the open houses in the area and most of them had no offers.
The thing is the sellers are slowly realizing the new reality and only their personal experience would help them shun the bubble mentality , by personal experience means holding open houses every weekend and receiving no offer. So I only expect price stabalization going further.

And oh Let me clarify about "rich kids from india", I'm not sure because the really rich ones don't even bother study engineering or programming computers or coming to live in united states. They might visit , but they don't want to live here. I'm not so sure about people from china.

FWIW: Two neighbors on my street are originally from India and they both mentioned to me at different times that they have stopped paying their mortgage because they are so far under water. One of them wanted to buy my house for all cash to keep his kids in the same school. I don't know what the other guys plan is but he stopped mowing his front yard about a month ago.

sybrib says

P2D2,

What you write does not jive with what I see.

So many recent immigrants with PhD’s from elite US schools, driving late model cars, nice import models, sending their tots to Challenger and then later on Harker or some other elite school like that,

sybrib,
Please re-read my earlier post. How exactly does it contradict my point? Of course there are such Asian people here - driving Mercedes, have palatial homes. I know enough Asians who made enough money stock options (despite dot-com bust). I also know enough Asians who made lots of money in real estate (please read the last line of my earlier post). These are not the people who bought their homes in 2005-2008. Most likely they sold in that timeframe and made lot of money.

sybrib says

These folks are my peers in the job market; I know +/- or so what those jobs pay and what one can afford: the only rational conclusion is that they are all very wealthy from family money “back home”.

sybrib,
If you are wealthy and successful in this country, would you bother to migrate to another foreign country and live there? Just ask yourself. 400 years back those pilgrims in Mayflower ship wasn't exactly the wealthiest people of Europe. They came here for new opportunities. Things did not change in 400 years. Those Irish immigrants in New England or Italian immigrants New York were not wealthiest people in Ireland and Italy either. Same way, the Indian software geeks or Chinese hardware geeks in Silicon Valley are not from wealthiest families either. They (including me) came here for opportunities.

There are indeed very wealthy people in Asia. They are successful in their own countries. They don't need to come here to become wealthy or successful. I do know couple of cases of wealthy sons of businessmen coming to America to get MBA degree from Harvard/MIT/Stanford (with dad's money of course). But normally they tend to go back and enter into their dad's successful, and most importantly already established worlds.

Those mythical Asians buying up real estate in Silicon Valley - well, that's indeed myth.

P2D2 is exactly right, I myself am an Indian and obviously all my friend circle in Bay Area and (then there friend circle further on) are from normal so called "Indian middle class", there might be some exceptions though.

Zlxr,
Wealthy enough to pay Fortress Prices.

For those who wants to get out of their underwater property either through short sale or foreclosure, be prepared to go through foreclosure even if you have a perfect short sale package sitting on your lender's desk for approval. We tried to do a short sale on our home so that we can relocate closer to work, but the lender these days will not even consider a short sale unless you are completely broke, in lender's words: "no surplus money at all". So be prepared to ruin your credit and go through foreclosure if you really do want out of your home. Banks are blood suckers who takes tax payer money but will not try to help you in any way. So don't expect them to be nice.

I’m normally just a lurker who felt like posting a comment tonight.

As someone who has personally experienced in the early 1990's the Japanese equity bubble and its effect on the housing market boom / bust cycle in Hawaii, it's my position that there's considerably more downside risk to this housing cycle.

Though others might disagree, I've lived long enough to learn (the hard way) that the 4 words most detrimental to your wealth that those in power (your banker, your real estate agent, your government, the federal reserve, your newspaper, etc.) want you to believe are these...

"This Time it's Different"

It's NEVER different!!! The bigger the boom...the bigger the bust!!!

Statistics show that under a "normal" housing cycle, it takes 15 to 25 years to go from peak to peak. The peak to bottom of a "normal" housing cycle is 7 to 12 years.

Without a doubt, the United States (and especially California) just had the BIGGEST housing boom cycle in it's history. To believe that what happens on the Mainland won’t effect the Hawaii housing market is a recipe for disaster.

Therefore, if history is to be our guide, it’s very premature to say that after JUST FOUR YEARS (summer of 2006 being the peak of this cycle), that the housing market is near the bottom and the good times are here again. To believe such nonsense is going against all that history has taught us. Over…and over…and over again.

Think I’m wrong, then just compare / look at the US stock market. The Nasdaq made a high of +/-5200 in 2000. Here we are ten years later and we are still nearly 60% off those highs. You won’t see Nasdaq 5000 again until the year 2025.

Of course, those in power and this newspaper article would have you believe that “This Time it’s Different”.

Please no flaming. Have a nice day!!!

Spidey,

In the late 1980's that thomas.wong cited, Tianamen Square massacre was about to happen or had just happened. India was mired in its Soviet leaning aspirations. We did not have a very large H-1 visa program, and foreign students in PhD programs in the USA was a novelty.

Compare to thomas.wong's late 1980's, this time is different.

Sybrib:

I totally disagree.

As with all markets that go through a boom / bust cycle the events, people, and circumstances might be different. This is what you're addressing.

But the biggest human factor that effects all markets NEVER changes. That's greed and fear.

Again, I repeat the the 4 words most detrimental to your wealth is..."This Time it's Different"

Unless the real estate market is can eliminate this "human factor", this time will NOT be different.

sybrib says

Zlxr,
Wealthy enough to pay Fortress Prices.

And why would a wealthy foreigner pay "fortress price" for a 50 year old 3BR ranch style exceptionally boring crapbox? School district? If they are so wealthy, they would buy something in Carmel-By-The-Sea. Or may be a penthouse in Manhattan. But Cupertino? Sunnyvale? Give me a break!

sybrib says

Those were the days before the recent rise of the new wealthy elites in China and India. The typical Fortress buyer was a middle manager from Lockheed, not the rich kid of a rich family “back home” in Mumbai or Shanghai.

It’s different this time.

Just saying "it's different this time" does not make it so. I would like to see some factual information with some reasonable trend. The reasonable trend I mean NOT anecdotal. Some oil-rich sheikh's son buying a penthouse in San Francisco or Manhattan downtown - that's anecdotal. I would like to see some factual information that Asian wealthy people are buying (or helping their children to buy) properties in Silicon Valley.
If so, why are they buying here? Do they think that their established successful worlds are in the verge of collapse that they need to move their wealthy/assets in America? And buying real estate in overpriced area is a way to do so? I doubt.

The wealthy elite in asia/india ect. arent going to leave their comfortable cocoon... The poor do most of the migrating... Look at mexico for evidence of this... The rich mexicans stay in mexico where they can stay rich and happy.

And don't forget all the "wealthy Latin Americans" who were supposedly going to be buying up all of those Miami condos.

Eyes roll at the rubes.

thomas.wong1986 says

PPete says

The double dip started in June. Buckle up!

Just an ongoing correction in the works.

Economy is self correcting and those natural forces are much more powerful than Fed.

sybrib says

Spidey,
In the late 1980’s that thomas.wong cited, Tianamen Square massacre was about to happen or had just happened. India was mired in its Soviet leaning aspirations. We did not have a very large H-1 visa program, and foreign students in PhD programs in the USA was a novelty.
Compare to thomas.wong’s late 1980’s, this time is different.

You hit on a not much mentioned item. Foreigners getting a semi-free education starting back in the early 90s from US tax payers, and found themself working in SV. They didnt come from wealthy families. Not to mention earlier folks from HK to escape mainland handover, but that didnt have any impact on prices in places like Cupertino. Prices still fell for years after they came here.