patrick.net

Harm

The fallout goes even further than what you mentioned. We got our loan, but only because we have impeccable credit and no credit card debt. They scrutinized the hell out of our loan (too little too late??) and I've seen tons of sales fall through out here because the banks are so scared of lending right now.

Normally I wouldn't think this was such a bad thing. But at this point those who were careful, saved money and waited out the bubble may find it really hard to get financing or have to pay higher interest rates. In the end that seems an awfully unfair price to pay for being responsible.

HARM Says:
Palo Alto Daily News:
Counseling offered to troubled borrowers ... In all of 2006, the group’s Sunnyvale office, which provides mortgage counseling to residents of Santa Clara, San Mateo, Alameda and Stanislaus counties, got one or two calls a week from people seeking advice, Eichner said.

Now it’s getting two or three calls a day.

That, my friend, is one hell of a rebuttal to my thesis. Thanks!

“Right now,” Eichner said, “we’re drowning in these calls.”

SP :

You are unintentionally highlighting what I said. People like you and in general bloggers here are not a representative sample. I will repeat. Not just being elitist, we all also have a different mindset.

Trulia says Palo Alto has 79 notices of defaults or foreclosures.

http://www.trulia.com/CA/Palo_Alto/#for_sale/Palo_Alto,CA/foreclosure_lt/

So much for it being the Fortress Core.

And Cupertino has 16. Some of these are apartments costing less than 600K.

http://www.trulia.com/for_sale/Cupertino,CA/foreclosure_lt/#for_sale/Cupertino,CA/foreclosure_lt/date;d_sort/

Sunnyvale, Santa Clara each over 90. Mountain View over 35. Anyone (eburbed ?) wants to argue that there at lest 35 GOOG employees to save Mtn View ?

Yeah, I need to sleep, but I discovered Trulia only today.

StuckInBA Says:
Mountain View over 35. Anyone (eburbed ?) wants to argue that there at lest 35 GOOG employees to save Mtn View ?

Sure there are - but they may not want to.

Yeah, I need to sleep

Sleep is over-rated. :-)

I just noticed previous sales data has disappeared from Zillow on many properties that I _know_ were sold within the last ten years. What gives? Are realtwhores advising clients to hide this info?

Does anyone have other easy online sources to figure out how much a place sold for (besides reverse-engineering it from property-tax info)?

My mailbox overflows with this stuff plus endless cc offers for balance transfers, etc. I still notice on lots of websites adverts for refies with the stupid dancing girl. An aquantiance of a friend was telling me the other day that he was housing shopping since he was pre-approved for $200k mortgage even though he has no job, no income, no savings and little prospect of one. I would of thought that those days were over.

One think I'd like to hear from from folks are thoughts on the idea of a tacit conspiracy to keep the consumption-based economy afloat with the endless 'no interest, no payments for"....I have seen everything from 6 months to 4 years. I get a at least 3-4 offers a day in my mailbox for cc offering balance transfers at 0 apr for 12 months, etc. I know people who have been floating as much as 100K on a range of balance transfers for 4-5 years. Sure bank may get the upside in the risk equation if the borrower can't pony up after the term but chances are if they can't pony up its because they are broke and would eventually fall so far behind that it could never be collected. It would seem that since the scam is so wide spread and pervasive, someone somewhere must understand how dangerous this is. In the meantime, a ton of merchanise is moved under this equation at a healthy profit.....what happens when the music stops....which is my main wonder. If average americans are so tapped out where will the money come from to 'grow the economy' if our economy is so consumption dependent....

Also. I found some interesting BBC documentaries out of the UK by Adam Curtis (wiki him up) relative to the topics at hand....you can bittorrent his films as they are not available 'in stores'.

Happy New Year!

try propertyshark ( I hate to do this because I almost sound like I work for them). Propertyshark not only has the sale history of a dwelling, but also the current loan information (if available) for the existing owner. Your ultimate internet peeping tom tool.

"Outside of the Amish" LOL!

Good to see having a major move during the Holidays hasn't dampened your sense of humor HARM!

I agree, in nearly every major market there simply isn't land cheap enough to make a DIY model work. Additionally (for those of us that have had neighbors that have attempted this) it's a pain to have a half built home complete w/ moonlighting power tool sessions. So from that perspective, not very practical.

However, I COMPLETELY fail to see why this still isn't the standard for 2nd/vacation/retirement homes! At the very least we should be buying "shells" that are "dried in" and then take the rest of our lives to finish them (or... not).

But NO... the REIC approach there was (of course) upscale and TURN-KEY! Well we're regretting it now. Look no further than Bend for all the abandoned, specuvestor, 2nd/vac./ret. upscale, turn-key, golf course homes? Can't wait to see all those golf courses leveled and turned into Walmarts!

Bill Gross is totally on crack. I just stepped out for a minute and when I got back he was advocating at LEAST a 3% Fed rate, yes, more liquidity pumped into the system AND EVEN MORE tax breaks and "incentives" for first time home buyers!

Unreal. How is it possible to be more generous than we already are?

I love this graph. http://patrick.net/housing/contrib/annual.html

It is very visual. I like how it is getting ready to have the lines cross each other.

"Outside the Amish" etc.

I predict, in the not too distant future, most houses will smaller, energy efficient and factory made.

Sure you will be able to customize it to some extent but custom building houses will go away.

In other words, 21st century will be for houses what 20th century was to cars. Individuality will have to come from the multitude of choices and the customizations on top.

People will buy land and then shop for houses (maybe at a real "home depot"?)

That's already the tract house model.

Individuality will have to come from the multitude of choices and the customizations on top. People will buy land and then shop for houses (maybe at a real “home depot”?).

Double Wide or Single Wide?

There is a blurring of the distinction between a "stick built" and a manufactured house these days. I'm amazed how much arrives on-site nowadays in the form of pre-fab subassemblies. Around here trucks pull up at the site loaded with pre-fab truss sections, which are put in place with a crane and nailed into position.

@ Malcolm:

Great graph!

Is it too large a leap to suggest that the lines on that graph, have already crossed?

SP said:

Many of my colleagues have spouses who are at similar levels. And neither I nor my wife are near the highest paid people in our companies.

SIBA & others have already pointed this out, but let me reiterate: My (far more modest) HH income places me above 80% of the rest of the U.S., and (probably) above 60% of NCal HHs. SP's HH income places him firmly in the top 1% nationally, and easily the top 5% of NCal HHs.

SP & wife are not representative of what "normal" people earn, even in rich'n'mighty NCal.

I am quasi-"rich" by national standards, and about "average" by NCal standards. SP is "extremely rich" by national standards, and merely "very rich" by NCal standards. The fact his family derives any income from patents, stock options, or an ESPP (I actually had to look that one up), says volumes about how "not average" he truly is.

Sources: http://en.wikipedia.org/wiki/Household_income_in_the_United_States
http://quickfacts.census.gov/qfd/states/06000.html

RE: tract houses.

Tract houses don't all have to be bloated energy-hogging 5000sft McMansions, but unfortunately that's the way they're built these days. Anyone remember Levittown?

There's also no reason they all have to be bland, homogenized or unattractive, but I suppose economies of scale do tend to limit variety.

I think the lines have already crossed if you were to consider the FSBO and other types of unreported listings like the cough cough REDC auction catalog that I just received that is now twice as thick as before. That is Patrick's graph by the way, I just wanted to draw attention to it since I thought it made a powerful visual.

My first house was a modified tract house that was only 1200 sf from the 50s. It was origianlly about 900 sf.

The new ones are overkill and I know I will get flack for saying this but I kind of like uniformity.

@Malcolm,

That's a nice graph. Here's a similar one from CR:

I think some definitions might be in order if we are going to have any sort of discussion about the future of homebuilding.
What is a modular home?
Modular homes are built in sections in a factory setting, indoors, where they are never subjected to adverse weather conditions. The sections move through the factory, with the company's quality control department checking them after every step. Finished modules are covered for protection, then transported to your home site. They are placed on a pre-made foundation, joined, and completed by your local builder.

A modular home conforms to the building codes that are required at the specific location it will be delivered to, and in many cases construction exceeds the required codes.

And don't think that you can't contstruct a McMansion with modular building techniques. Try this 6,000 sq. foot monster on for size. Hey, its all about cost efficiency.

Funny you should mention Levitt....
http://www.nytimes.com/2008/01/03/business/03abandon.html

"Paul S. Singerman, Levitt’s bankruptcy lawyer, said that as the real estate market in Florida went into “an absolutely unprecedented and catastrophic downturn,” the builder’s customers across the Southeast became victims. “There is a bad story, an unfortunate story, about every customer that placed a deposit,” Mr. Singerman said.

Seasons is less than a quarter finished. About 90 buyers have paid a total of $3.48 million in deposits for houses in varying stages of completion, ranging from all but done, like the Costanzos’, to unadorned dirt. "

People,

I am feeling a bit depressed. I was hoping the madness by borrowers and lenders will start to go down. If it's the last hurrah before going out, then there is some hope, else it's getting beyond hopeless.

From LA times
http://www.latimes.com/business/la-fi-autoloans30dec30,1,3452970,full.story

People are rolling over car loan, some are going for 7 year car loans, 45% car loans are over 6 years. But why is this good for our society ?

I know people are addicted to debt like drugs, but aren't the lenders risking their money ? It's OPM at intermediate points but at the end of the chain someone is investing their own money. This does not sound like smart lending. Do cars also go always up in value or what ?

This is pathetic. Just when you think we have reached a low, we start digging again.

@SQT,

I certainly relate to your frustration, but consider the greater (as in, "more than nothing") scrutiny to be a good thing --and a healthy sign the mortgage market is (finally) returning to sanity. Also, the "new" rules (which used to be the old rules) apply to everyone --not just you. Pretty much every borrower must now subject him/herself to full doc and a proctological exam.

And this eventually means... lower prices, as $0-down neg-am NINJA Howmuchamonth financing slowly becomes extinct. And that's certainly not a bad thing, right? I think the key is not to jump the gun too quickly and be a too-early falling-knife-catcher. There are plenty of quality rental houses out there in most communities (Marin notwithstanding), and vacancies and inventory levels are rising sharply almost everywhere.

If you happen to find a true "deal" that's fine, but I wouldn't pay more than 10X annual equivalent market rent, or more than 3X local median HH income. Don't become a Jealous, Bitter Money-Renter out of desperation. *Do* be a Smug, Rich Renter with dry powder and an eye to the Credit-Suisse ARM-reset chart!

@SIBA,

Yup, new conventional wisdom: "when in a hole, keep on digging to China". Literally (as in, who is buying our bad debt?).

$0-down 6-year loans are sooo, like, yesterday. 50-year, serially refi'd neg-am NINJA car notes --here we come!

DennisN,

I'm sure they have them up your way, right? Adair Homes? They usually do budget advertising and claim if you have the land, they'll deliver a "dry shell" for like $30-$45 a sq./ft!

Whenever I show my wife the ad she just gives me the eye-roll. We had one built just blocks from us and to say it's.... spartan, would be accurate. I point out this how tract homes used... to look. You know, complete w/ (1) "mason jar" light fixture for the driveway?

Here's what a LOT of people don't seem to understand about turn-key packages. Sure, it's great to have upgrade this and all appliances included, but they only last so long? Chances are when that dishwasher is rotting away in a boneyard (some poor guy is STILL making payments on it!)

"(which used to be the old rules)"

Yeah, kind of noticed that. This is why Bill Gross was wearing his pink PIMCO hat today. To plead for the new lending "standards" to make a come back. The only reason I can surmise he's clamoring for MORE first-time-buyer tax incentives is to enable move-up buyers to support his flagging portfolio.

?

He is now taking his marching orders from the REIC. The REIC knows (now) if there is to BE a recovery, they have to re-ignite the base of the pyramid.

StuckInBA,

I have noticed that the cars, on average, in my area are starting to age a bit compared to the boom years. I think you just told me why.

DinOr - when I was a kid some people in back of us lived in a Quonset Hut. I dunno how the adults felt but I thought it fuckin ruled. Kids think everything is fun - I remember doing the "olympic long jump", over our open cesspool! A botched jump could be tragic, take that, Jackie-Joyner-Kersee! And our own place was a nightmare, a bare light bulb per room for light and the neighbors hooked up to our electric, I'm sure of, looking back.

Still, Quonset huts are pretty darn cool, do one up right and it could be a really nice place to live.

So, why pay all this money for vinyl and stucco and chicken wire?

Urgh, and this place I'm living in now is a turn-key - made to be nice to live in for a few years while you get your real house built. It's ok, but everything's cheapo and it's not as well insulated as it could be.

My friends and enemies,

I was in SF last weekend. Beautiful city I must say.

>> I am a principal engineer (R&D) at a large tech company

SP,

What is the salary range of a principal engineer? Is it like 160K to 190K?
And what is the salary range for a tech manager? Is it the same like principal engineer? One HaHa = 150K. You said you folks earn 2.5HaHa = 375K. What is the price you paid for your house?

How much does a good townhouse cost in a good (but not pretentious) neighborehood of SF?

2.5 HH in the Bay Area is nothing. I don't make much. But my buddies who are at the director level in MSFT make 1.5-2 HH alone. And there are hundreds of these people in MSFT. Some of their spouses make more in the health care industry. The Silicon Valley is over-rated. It attracts the type of people who are drawn to lotteries.

HARM said:
SP & wife are not representative of what “normal” people earn

That is not the issue. I am sure I am not the only one in this situation here. The question is only the size of _this_ set and its impact on a specific market segment. "Average", "median" and "normal" aren't quite so relevant in that context. Sorry if that was not clear, and I won't beat this horse anymore.

The fact his family derives any income from patents, stock options, or an ESPP (I actually had to look that one up) says volumes about how “not average” he truly is.

I will grant that patents are an anomaly, but options and ESPP are actually very widespread in the tech-industry. Again, I was not saying any of this is normal or average - but when you look at the market participants, you can't just ignore its impact. That's all.

HARM said:
“extremely rich”

I have said it before and will say it again - it may be a very nice wage, but it is still a wage. I wouldn't call _any_ wage-slave "extremely rich".