patrick.net

Does anyone know why paragraphs do not work in thread-edit mode?

Is it some CR-LF versus LF anomaly because I'm not posting from windows?

The weird thing is that paragraphs work fine when I post just a regular comment as this one.

Update/solution: After typing in the text, select all of it and hit the left-justify buton. Then the paragraph breaks survive.

BTW I bought a house this week as an investment property in the East Village in Chicago.
So there's the reason we just keep going lower and lower :)

June RE two or three months ago, is like a decade in this Market.

In June the guy wanted 225K for the house I bought, on July for 170K which appraised on Aug 1st for 160K
which is what I ultimately got it for.
yeah prices are going up alright. 7 years ago.

Tenouncetrout says

June RE two or three months ago, is like a decade in this Market.
In June the guy wanted 225K for the house I bought, on July for 170K which appraised on Aug 1st for 160K

which is what I ultimately got it for.

yeah prices are going up alright. 7 years ago.

Congrats. What was the value of your new home in 2005 ?

Zillow value, or real value?

It didn't sell in 05 but Zillow likes to pretend it was worth 400K and Still says it's worth 195K

A $2000 rental costing $500,000.
I have to admit, I almost did a spit-take on that one. If investors come out of the woodwork for that type of deal, I'd say all bets are off. We're in a deflation nation, so anything can happen, I suppose. The current reading from my crystal ball says that rents will be constrained as the prices in the middle and high tiers fall and pancake the lower end (which, most measures say, has bounced off lows and is slowly rising -- for now). I'm guessing we're more like 1993 than 1994 (see historic CS data) at this point , so remaining positive in July would be an amazing feat.

cvoc13 says

It is coming to many cities across Ca. as the state is broke, and has to cut spending in effect austerity all across california. That will also effect the housing prices

Living in the safe confines of Westwood *well* above Santa Monica Blvd in the 80s was educational for me.

Anything south of Pico was simply a no-go area for me (except for the In n Out on Venice that we made armed trips to on occasion). j/k about the guns

Then in 1988 a UCLA chick was killed in a gangbanger's crossfire and Westwood Village effectively became a "Sundown Town" as the LAPD tripled its police presence in the Village.

So aside from the loss of middle-class jobs due to gov't layoffs, what I also see possibly happening is a 21st century version of "white flight" to the Fortresses that can defend still themselves at night, providing something of a price stabilization for these areas.

EBGuy says

I have to admit, I almost did a spit-take on that one. If investors come out of the woodwork for that type of deal, I’d say all bets are off

$500,000 at 3.5% is $1500/mo. Rent is $2000. What am i missing, other than the rent declining and the actual cash going on on this deal for such a low return?

The hidden angle of this buy may be 15 year rates going to 2% later this decade, reducing the cost of capital to $800/mo.

Troy says

So aside from the loss of middle-class jobs due to gov’t layoffs, what I also see possibly happening is a 21st century version of “white flight” to the Fortresses that can defend still themselves at night, providing something of a price stabilization for these areas.

Back in the early 90s.."white flight" moved to the central valley, not to the Fortress towns.
Perhaps it will be same this time around.

Troy says

EBGuy says

I have to admit, I almost did a spit-take on that one. If investors come out of the woodwork for that type of deal, I’d say all bets are off

$500,000 at 3.5% is $1500/mo. Rent is $2000. What am i missing, other than the rent declining and the actual cash going on on this deal for such a low return?
The hidden angle of this buy may be 15 year rates going to 2% later this decade, reducing the cost of capital to $800/mo.

500K at 3.5% is ~$2250 a month

+PMI, + insurance, + maintenance +property tax -tax deduction

I guess some savvy investor will be snapping up 4487 Sheepberry Court soon. It's currently selling for $460k and rents for $2,050.

$460K looks reasonable for that.

Purchase Price 460000.00
Down Payment 89240.00 (20.00%)
Loan Principal 368000.00

Points 7360.00 (2.00%)
Points Net Tax 4769.28

IO 1073.33 (3.50%)
PMI 0.00 (0.50%)
Prop Tax 473.03 (1.23%)
Tax Credit -377.12 (35.20%)

Subtotal 1169.25

HO Ins 76.67
HOA/Utils 250.00
Maintenance 95.83 (0.25%)
Opportunity 235.02 (3.00%)

Total Other 657.52

Nominal Cost 1826.77

$200/mo under the cost of renting, and TCO of ~$1000/mo starting in 2025.

The question is, of course, what will rents be in 2015, 2020, and 2025. One would have to be bold to predict rents going down.

Troy says

The question is, of course, what will rents be in 2015, 2020, and 2025. One would have to be bold to predict rents going down.

If we look back to 1998-2000 it took an explosion of jobs to see rents go up. But once the funding for these jobs dried out, rents fell back to inflation norms. So its a safe bet 2010-2025 will remain equal adjusted for inflation. We are way past the maturity in our local industries. Perhaps other regions will experience job booms like that of SV in 1998-2000 where rents outpaced inflation. It certainly is more difficult to predict where rents will go be beyond inflation, vs when.

EBGuy says

I guess some savvy investor will be snapping up 4487 Sheepberry Court soon. It’s currently selling for $460k and rents for $2,050.

So its not selling for 600-800K...

Back to inflation line...

What cost $245000 in 1988 would cost $438618.17 in 2009

This kind of tells you how prices were in Concord for over a decade before the bubble.
Buyer in 2007 is eating crow!

Property History for 1060 OAKLEAF Ct
Date Event Price Appreciation Source

Aug 26, 2010 Listed $429,000 -- EBRD #40484520
Sep 28, 2007 Sold (Public Records) $603,000 6.1%/yr Public Records
Aug 28, 2007 Delisted -- -- Inactive EBRD #40284813
Jul 21, 2007 Listed ** -- Inactive EBRD #40284813
Nov 12, 2003 Sold (Public Records) $480,000 12.4%/yr Public Records
Aug 20, 1997 Sold (Public Records) $232,000 1.8%/yr Public Records
Aug 16, 1994 Sold (Public Records) $220,000 -6.4%/yr Public Records
Nov 19, 1993 Sold (Public Records) $231,000 3.0%/yr Public Records
Nov 10, 1988 Sold (Public Records) $199,000 -- Public Records

Calculated Risk has more to say about the time lag of Case-Shiller and falling prices:

http://www.calculatedriskblog.com/2010/08/on-case-shiller-house-prices-october-is.html

Thanks, I’ve been watching this one.
Any comments on 1124 Victory Lane, which is around the corner. It's a 3/2 (1415 sq.ft.) short sale for $210k. Have you seen the interior? It sounds like they have done a bit of remodeling work.

thomas.wong1986 says

All it would take to revitalize SV is a boom in alternative energy electronics, electric cars like they are going to build at the Fremont plant, a revolution in robotics, or something similar we haven’t thought of yet.

The obituary of San Jose keeps being written, and the writers keep getting it wrong. The nature of technology is boom bust.

I hope you are right.

So many people are putting their faith into The Next Big Thing in Silicon Valley, they are almost as religious about it as fundamentalist Christians are about the their own Next Big Thing, the second coming of Christ.

AM I to take it that NONE of you are thinking deflation as an possibility. My Rent in Dublin has gone down from 1,699 in 2008 to 1,325 (Same Apt. Same everything) what is that, 22% in 2 years? or so, I expect next April it will be 1,275 or less. I Don't know if I will have a job to keep paying the rent. Also in the same time my health care has gone from 572 to 733 and that trend is also only going to continue.

sybrib says

So many people are putting their faith into The Next Big Thing in Silicon Valley, they are almost as religious about it as fundamentalist Christians are about the their own Next Big Thing, the second coming of Christ.

And that is the reason why everyone used risky loans in the SF Bay Area after 2000. We went to 60% using ARM loans. We are 10 years out from the last pop, yet there is little to show of any kind of boom or "Next Big Thing". That is why you have so much myths running around Silicon Valley.

ALT Energy isnt something to crow about.

Deere sells wind energy business for $900M

Deere invested $1 billion over the past five years in the financing, development and ownership of wind energy projects.

Net Loser!!!!

I think that deflation and prices are not the same thing.

Prices can bea symptom of deflation but prices for some things, (how about medical care, child care or tuition for instance?) may very well rise during a period of deflation.

cvoc13 says

AM I to take it that NONE of you are thinking deflation as an possibility

Yes, deflation is second nature to South Bay. Yes, deflation has already been here for some time.

EBGuy says

A $2000 rental costing $500,000.
I have to admit, I almost did a spit-take on that one. If investors come out of the woodwork for that type of deal, I’d say all bets are off. We’re in a deflation nation, so anything can happen, I suppose. The current reading from my crystal ball says that rents will be constrained as the prices in the middle and high tiers fall and pancake the lower end (which, most measures say, has bounced off lows and is slowly rising — for now). I’m guessing we’re more like 1993 than 1994 (see historic CS data) at this point , so remaining positive in July would be an amazing feat.

Since you are all from upper middle it seems you probably do not realize what renting is all about. As the economy tightens the magistrates will be less hurried to evict. Your place will be trashed if you're lucky, lotted if you're unlucky, and destroyed if you're really unlucky. Maybe some of you have had renters do it to you. As more people have less work then they'll do more mischief.

Stiff you on part of the rent or late or missed payments altogether will become normal.

There is no recovery gonig on but simply a controlled collapse. That's what I see anyways. We have a nice bump here where we'd better all start taking on profits. How long the bump lasts we can speculate but the signs are more than clear that the recession is just beginning. Belt-tightening is no longer a hobby but becoming a necessity to keep the house.

What has kept the economy alive is people scrambling positions. With hyperinflation probable everyone had to make big moves to try to secure their assets. That is, bought hard assets. When your "Federal Reserve Notes" turn to toilet paper then that "bad investment" in a house won't seem so bad. But i'm starting to think they'll pull a 1930's on us. Simply freeze up the economy so they can "acquire" all valuable assets. Gold, land, etc.

sybrib says

I think that deflation and prices are not the same thing.
Prices can bea symptom of deflation but prices for some things, (how about medical care, child care or tuition for instance?) may very well rise during a period of deflation.

i know. Its nuts. Prices are going up but people's ability to buy is going down. Well, people are buying $200 smartphones so maybe people really have more income than reported. But i guess evena street corner thug sports a golden necklace.