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B.A.C.A.H.
2011 Mar 26, 8:58am
Why is it that I can get 100×1 price/rent ratio for commercial property in San Jose,
We can learn a lot more from individual people's anecdotes on a forum like this than about macro trends which are open to everyone's individual interpretations.
Dunross, please us how things are going with your commercial properties in San Jose.
Price is 100x of monthly rent. I can buy a 3000sqft commercial office in San Jose today for $300K which rents for $1/sqft.
Does anyone have numbers of commercial vs. residential vacancy rates for Santa Clara County.
Read several articles per San Jose Mercury regarding former R&D/Mfg space pinned between 20-25% vacancy. Milpitas having the highest at 25%. What was once R&D/Mfg are now Churchs and other off the wall small retail business. Seen couple other commercial locations are being converted to residential/condos/TH. I expect to see more of this.
tatupu70
2011 Mar 26, 9:58am
I think you missed my point. You are interpreting the data in the way that conforms to your expected result, rather than looking at it objectively.
My view has been that housing was overpriced and that the “bottom†formed in 2009 was the result of the tax credit. which after its expiration prices will continue declining. People who have been adamantly denying that this was the case have a pretty hard time explaining the data. Something is not conforming to someone’s expectations, but that’s on your guys’ end, not mine.
Nope--it's conforming to my views as well. I said that the credit expiring pulled ahead demand for a few months. Then we're into winter. If sales/prices continue to fall through summer, then I'll agree with you.
tatupu70
2011 Mar 26, 1:08pm
Completely ignorant comment showing a complete misunderstanding of market psychology and basic econ-101 fundamentals.
Technical analysis is pretty roundly discredited in Econ textbooks.
dunnross
2011 Mar 26, 1:12pm
Completely ignorant comment showing a complete misunderstanding of market psychology and basic econ-101 fundamentals.
Technical analysis is pretty roundly discredited in Econ textbooks.
Another ignorant comment by Tatapu. Show me 1 Econ textbook which discredits technical analysis. Support and resistance lines are basic patterns of human psychology. How many times did you buy a stock, just to see the price fall, giving yourself the word that you will sell the day the stock gets back to your buying (break even) price. This is exactly why the price bounces, but only as far as the resistance. The same thing holds in reverse for support.
tatupu70
2011 Mar 26, 1:22pm
dunnross says
Completely ignorant comment showing a complete misunderstanding of market psychology and basic econ-101 fundamentals.
Technical analysis is pretty roundly discredited in Econ textbooks.
Another ignorant comment by Tatapu. Show me 1 Econ textbook which discredits technical analysis. Support and resistance lines are basic patterns of human psychology. How many times did you buy a stock, just to see the price fall, giving yourself the word that you will sell the day the stock gets back to your buying (break even) price. This is exactly why the price bounces, but only as far as the resistance. The same thing holds in reverse for support.
Me--never. I'm more of a buy and hold guy.
Applying technical analysis to housing is beyond ridiculous. Each house is different, the data is usually 2-3 months old before it's even available, and as others are so fond of pointing out, it's more than an investment. Your theory is that people follow the median price history charts and sell their house if they see a head and shoulders pattern?
dunnross
2011 Mar 26, 1:33pm
Applying technical analysis to housing is beyond ridiculous. Each house is different, the data is usually 2-3 months old before it’s even available, and as others are so fond of pointing out, it’s more than an investment. Your theory is that people follow the median price history charts and sell their house if they see a head and shoulders pattern?
Most people don't follow technical analysis for stocks either, because they don't understand it. But, regardless of whether most people follow it, or not, markets always follow technical analysis patterns, because technical analysis is a psychological indicator. Claiming that real estate doesn't follow technical analysis is as akin to saying that the housing market doesn't follow basic laws of supply and demand.
tatupu70
2011 Mar 27, 1:08am
tatupu70 says
My view has been that housing was overpriced and that the “bottom†formed in 2009 was the result of the tax credit. which after its expiration prices will continue declining. People who have been adamantly denying that this was the case have a pretty hard time explaining the data. Something is not conforming to someone’s expectations, but that’s on your guys’ end, not mine.
Nope–it’s conforming to my views as well. I said that the credit expiring pulled ahead demand for a few months. Then we’re into winter. If sales/prices continue to fall through summer, then I’ll agree with you.
So I’m not molding reality to fit my views? Sweet.
BTW “a few†is a nice euphemism for several. Sales are still in the shitter.
No--you are still ignoring the parts that don't conform to your views. Like the verbage on the last couple of clear capital reports which clearly state that traffic is increasing and the housing market appears to be turning.
And a few means a few. Did you miss where I said it led right into winter? As you know, sales are usually down in winter.
tatupu70
2011 Mar 27, 1:10am
Most people don’t follow technical analysis for stocks either, because they don’t understand it
No--most people understand it. They just know that it doesn't work.
klarek
2011 Mar 27, 4:40am
All those comments which you make about technical analysis not applicable to the housing market really expose your ignorance and completely destroy your reputation.
That ship sailed a long time ago.
We're going sideways for a while...which means if you are in the market of buying, you gain nothing by waiting...except if you need a little time to save more downpay. It's not a bad situation. Nobody is in a rush, but if you have a job and have the money, you might as well buy now before you waste more money in rent.
And if this market drops 20% from here all over the US - trust me, you won't be buying then either because its going to be UGLY at that point. You probably won't have a job and things will be as bleak as they can be. Be careful what you wish for perma bears. Don't think you are safe when you're renting. Get ready to move, and move and move...
As most deals are cash offers these days, it sounds more like we are in the stealth phase than any other phase - LOL. Smart money is coming in the market. Institutional investors next...then the public and all you bears too. Right now there is public in the game so its hardly a Mania phase. You wouldn't have a crash forum in a mania phase because there would be no audience for it in a mania phase.
Just saying, not sure if those theoretical graphs are always 100% of the picture - but what do I know.
Have a great Sunday everybody!
tatupu70
2011 Mar 27, 6:40am
tatupu70 says
No–you are still ignoring the parts that don’t conform to your views. Like the verbage on the last couple of clear capital reports which clearly state that traffic is increasing and the housing market appears to be turning.
The irony of your remark is hilarious. Here are the last THREE Clear Capital reports:
* 03/10/2011
U.S. Home Prices Continue Slight Decline as West Region Drags Nation Down
* 02/03/2011
Clear Capitalâ„¢ Reports U.S. Quarterly Home Prices Still Down, But Showing Life in 2011
* 01/06/2011
Record Setting Volatility in 2010: U.S. Home Prices Down; Additional Drop Forecasted for 2011
Perhaps you’re due for a little bit of self-reflection.
Hmm. really? So, I say read the verbage of the report, and you quote the headlines? That's a little disingenious, wouldn't you say? Even so, you still prove my point. The Feb report headline says "showing life in 2011".
tatupu70
2011 Mar 27, 6:42am
but the YoY declines show that the credit didn’t just pull forward sales by a few months
How do you figure that? All the first time buyers were gone because they already bought before the credit ended. Is there a formula that tells you what the YoY decline should have been under that scenario? If so, please share it.
klarek
2011 Mar 27, 11:34am
And if this market drops 20% from here all over the US - trust me, you won’t be buying then either because its going to be UGLY at that point. You probably won’t have a job and things will be as bleak as they can be. Be careful what you wish for perma bears. Don’t think you are safe when you’re renting. Get ready to move, and move and move…
Heard the same bullshit from 2005-2008 about how the market wouldn't drop 20% and if it did we'd be living in caves while eating our own feces. All that will happen is banks will get socked and the cost of living will be cheaper.
Hmm. really? So, I say read the verbage of the report, and you quote the headlines?
I should have copy/pasted the entire reports which you've presumably read into this thread, that makes much more sense.
How do you figure that? All the first time buyers were gone because they already bought before the credit ended. Is there a formula that tells you what the YoY decline should have been under that scenario? If so, please share it.
You can start by comparing it to every other year during this season and see that somehow buyers appear elusive, despite the belief amongst some that housing bottomed two years ago which would have stirred up confidence.
Yeah, seriously. Is this a joke? tatupu once called St. Louis a high class community. Then we all saw the videos of his wife. That was comical.
It's a lot easier to score a laugh at somebody when he accuses others of warping their ingestion of data to suit their beliefs when he himself is trying to whitewash the tanking home prices. As for his wife being fat, I have no idea nor could I care.
Heard the same bullshit from 2005-2008 about how the market wouldn’t drop 20% and if it did we’d be living in caves while eating our own feces
You're right, I forgot - everything has been perfectly fine in the last few years, the real estate market drop did not have any impact on EVERYTHING. You live on earth?
klarek
2011 Mar 27, 11:53am
You’re right, I forgot - everything has been perfectly fine in the last few years, the real estate market drop did not have any impact on EVERYTHING. You live on earth?
It didn't impact everything, not at all. Markets moved, people got foreclosed upon, and dummies saw a 30% drop on houses that were doubly overpriced as a "deal" and have been trying every day since then to convince themselves they didn't catch a falling knife. I have my expectations of the market. I won't be renting if prices are 20% lower than they are today. You might be strategically defaulting though.
tatupu70
2011 Mar 27, 1:03pm
It’s a lot easier to score a laugh at somebody when he accuses others of warping their ingestion of data to suit their beliefs when he himself is trying to whitewash the tanking home prices
Klarek--try to stay on topic. We weren't talking about whether prices tanked. I think "tanked" is overstating it, but prices have definitely fallen from last summer. Just like you and I both agreed they would. The discussion is about where they will go from here.
Please don't misrepresent my views.
You’re right, I forgot - everything has been perfectly fine in the last few years, the real estate market drop did not have any impact on EVERYTHING. You live on earth?
It didn’t impact everything, not at all. Markets moved, people got foreclosed upon, and dummies saw a 30% drop on houses that were doubly overpriced as a “deal†and have been trying every day since then to convince themselves they didn’t catch a falling knife. I have my expectations of the market. I won’t be renting if prices are 20% lower than they are today. You might be strategically defaulting though.
Okay, so if it didn't impact anything at all, why would real estate drop another 20%?? - According to you, everything is great.
bubblesitter
2011 Mar 27, 2:00pm
When Cannibal Anarchy strikes, a 240 lb will be a treasure of priceless value as she will feed a family of six for a month.
Now, this is real possibility. :)
tatupu70
2011 Mar 28, 2:21am
So, just in today's headlines:
Pending home sales up
Pesonal incomes up
Rents rising
I know, I know. Housing prices are tanking. The double dip is well underway. Next stop 1975 prices.
Real estate: U.S. pending home sales rise in February
By Derek Kravitz
Associated Press
Posted: 03/28/2011 08:31:41 AM PDT
Updated: 03/28/2011 08:41:16 AM PDT
New-home sales plunged in February to record low
Are buyers turning away from new homes in weak markets?
WASHINGTON -- More Americans signed contracts to buy homes in February, but sales were uneven across the country and not enough to signal a rebound in the housing market.
Sales agreements for homes rose 2.1 percent last month to a reading of 90.8, according to the National Association of Realtors' pending home sales index released Monday. Sales rose in every region but the Northeast.
Signings were 19.6 percent above June's index reading, the low point since the housing bust. Still, the index is below 100, which is considered a healthy level. The last time it reached that point was in April, the final month people could qualify for a home-buying tax credit.
Contract signings are usually a good indicator of where the housing market is heading. That's because there's usually a one- to two-month lag between a sales contract and a completed deal.
But the Realtors group also noted "a measurable level of contract cancellations" that also occurred in February. Many buyers canceled after appraisals showed the properties were valued much lower than their initial bids.
A sale is not final until a mortgage is closed.
"Therefore, the latest pickup in pending home sales and mortgage applications might not necessarily end up in a measurable pickup in mortgage closings and translate into an increase in existing home sales," said Yelena Shulyatyeva, an analyst at BNP Paribas.
The pace of sales varied from region to region.
Lets read that again...
"But the Realtors group also noted “a measurable level of contract cancellations†that also occurred in February. Many buyers canceled after appraisals showed the properties were valued much lower than their initial bids."
????
klarek
2011 Mar 28, 3:13am
Okay, so if it didn’t impact anything at all, why would real estate drop another 20%?? - According to you, everything is great.
It would drop 20% if that's how much it's still overpriced. Whether things are great or terrible as a result is irrelevant.
Okay, so if it didn’t impact anything at all, why would real estate drop another 20%?? - According to you, everything is great.
It would drop 20% if that’s how much it’s still overpriced. Whether things are great or terrible as a result is irrelevant.
LOL! Ok, then...
dunnross
2011 Mar 28, 5:17am
select * from MLS-DB where distance < 50mi and city == 'San Francisco' or city == 'Los Angeles' or city == 'San Diego' or city == 'Washington' or city == 'New York' or city == 'Boston'
dunnross
2011 Mar 28, 5:17am
select * from MLS-DB where distance < 50mi and city == ‘San Francisco’ or city == ‘Los Angeles’ or city == ‘San Diego’ or city == ‘Washington’ or city == ‘New York’ or city == ‘Boston’
dunnross
2011 Mar 28, 1:57pm
OIL…it costs $8 to get a barrel of oil out of the ground - well, the price is 105 now…and has been for a long time. Even at 50 it was overpriced. It has not crashed somehow.
It also costs about $20M to to pay for the smallest possible oil well before you can even start taking it out of the ground. And, that assumes that you own the land, in the first place.
OIL…it costs $8 to get a barrel of oil out of the ground - well, the price is 105 now…and has been for a long time. Even at 50 it was overpriced. It has not crashed somehow.
It also costs about $20M to to pay for the smallest possible oil well before you can even start taking it out of the ground. And, that assumes that you own the land, in the first place.
Are you considering drilling in your backyard? :)
OIL…it costs $8 to get a barrel of oil out of the ground - well, the price is 105 now…and has been for a long time. Even at 50 it was overpriced. It has not crashed someho
I was told by an oil industry person that the "lift cost" of oil is highly dependent on the site. She pointed out that for some (deep water?) wells the lift cost was in excess of $40 per barrel, and that "it hasn't been so long that oil was $14 per barrel", explaining why the industry had been reluctant to rapidly expand production into higher priced areas. Of course this is the production cost of a marginal barrel of oil -- not taking into account the capital investment of developing / acquiring the site. So are there some people making a killing on wells with an $8 per barrel lift cost? Probably so...but that incremental 1% of production (oil sands?) almost certainly have a total (amortized) cost much closer to $100/ barrel. So the supply curve is somewhat steep, which accounts for some of the difference between the "$8 per barrel production cost" and what the market price is.
I think sales volume is a good indicator. Right now sales volume is still just around '07 levels, and we know what direction prices moved since then.
So, just in today’s headlines:
Pending home sales upPesonal incomes up
Rents rising
I know, I know. Housing prices are tanking. The double dip is well underway. Next stop 1975 prices.
So incomes increased... but where is the part where you show how X% increase in income is enough to halt a Y% decline trend in housing?
As I wrote on the other thread, condos have officially double dipped according to Jan. C/S SF Bay Area Condo Index.
I think SubOink’s crown molding might have been overpriced.
Definitely!
I think crown molding prices will crash.
:)
You guys are a funny bunch. Show me the post where I am saying that nothing is overpriced…
This one: http://patrick.net/?p=545652#comment-726836
So there is no such thing as an objective “overpriced†level.
SubOink says
So there is no such thing as an objective “overpriced†level.
That's very different than saying nothing is overpriced. Duh!
I am saying that you cannot determine that something is overpriced as its subjective, not OBJECTIVE.
SubOink says
You guys are a funny bunch. Show me the post where I am saying that nothing is overpriced…
Thanks for posting this...LOL
Please read again, Oil is overpriced, bottled water etc etc etc...
Funny!
That's just confusing items that have high profit margins with "overpriced".
Mr. A (seller) thinks his nice house for sale is worth $1M is subjective.
Mr. B (buyer) thinks Mr. A's house is too expensive is subjective.
Mr. C (market observer) can objectively say $1M is overpriced if it is observed that it can't sell at that price.
I am saying that you cannot determine that something is overpriced as its subjective, not OBJECTIVE.
You can come up with ways to make predictions on the value of the house and then compare the prediction to the eventual selling price. Add up the cost of the materials and multiply by some number that you think represents the way houses rise in value for a given area etc, etc. Then you decide how objective your method is by how well you make predictions. Do that again and again until you have a method that allows you to take information on a house and predict its selling price.
That sounds like science, but in this case the laws are different than the one that allows us to accurately predict when a ball of known size dropped from a known height will hit the ground.
The charts of past history are interesting, but there is no reason to believe that the future will follow that chart behavior. There are reasons for this. One reason is that since our economy in California was so heavily dependent on 1. spending home equity 2. construction 3. selling loans, houses, etc. This entire part of California's economy is vastly reduced or gone. The millions of low wage illegal aliens will tend to depress wages. If you are looking at houses in places where there are high tech and biotech (Bay Area), entertainment (LA), defense, high tech, etc. (San Diego), things could start to improve IF things improve economically. There is an interesting problem with the whole economy. Since the world needs the American consumer so much, once the American consumer is AFRAID to borrow/spend his money, the global economy slows down. The emerging countries were growing by selling to the Americans who were spending real estate bubble wealth. From now on, Americans will have to produce again to create true wealth. A lot of people are trying to stop it. Taxing energy production is one example. Letting gasoline become expensive because we cannot get our own oil is another. I fear that in many places we will have economic stagnation, with pockets of affluence and very little upward mobility.
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So did the double dip in housing begin? Why is everyone still bullish on housing?
#housing