patrick.net

There already WAS a crash in many areas....

what rob said!

we fear change!

Let's look at Patrick's original manifesto:

http://web.archive.org/web/20030804110639/http://patrick.net/housing/crash.html

If you own, SELL NOW while you still can.
If you rent, DO NOT BUY until the crash is clearly over, probably 2006.

He was never a perma-bear, the lax lending standards of 2003-2006 just delayed the inevitable by 4-5 years.

http://imgur.com/a/Hjiqy/three_markets

lays out what has happened to Fresno, Santa Cruz, and Salinas.

My old place that I grew up in in Salinas just sold for $315,000:

http://www.zillow.com/homedetails/222-San-Miguel-Ave-Salinas-CA-93901/19315151_zpid/

or $1900/mo amortizing payment ($1500 or so non-amortizing). Rents are probably $1400 or so, but I disagree that this is a bad time to buy since it is at least possible we'll be getting bona-fide inflation this decade.

Every decade since the 1930s has seen 20-100% inflation so if the 2010s is a repeat of the 1990s, 2018 rents will be greater than the amortizing mortgage payment.

This particular house is not a screaming deal but supply is kinda tight in Salinas. There are only 5 other houses in this nabe for sale, and they are generally $100K more.

For an investor that can swing a 15 year mortgage with 20% down, this has a monthly carrying cost of around $900 or so. It's hard to argue that $315,000 is too high for investors, and, unfortunately, that's who we've got to compete with to buy a house these days.

Hey, no con.

I just have to admit that finally, in some places, prices have fallen into line with rents, or below. That's all there is to it.

Not everywhere, not even most places. But some places, yes. I would have no credibility if I didn't acknowledge the basic math in the other direction.

I still think debt is bad and the government should not be pushing debt on anyone.

I do everything that Patrick says, because he is my God...

Don't begrudge him for interviews. He has something to say...

Oh Man, where do you people (Bailo) come from? INSANITY

I'm now wondering why Patrick never produced his birth certificate...

And she enjoyed her 3 week vacation and likely bailed on her house when it all went south. Instead I saved my money and made 3 cents interest in the interim :)

lotr1978 says

And she enjoyed her 3 week vacation and likely bailed on her house when it all went south. Instead I saved my money and made 3 cents interest in the interim

You can take her house, but you can never take her memories of Hawaii away. Not sure which is worth more. Sha la la la la la la live for today!

I had stopped coming around this site when Patrick jumped the shark and went all gaga over 0bamaCare and became a cheerleader for 0bama. Still, he is correct in his assertions that the bottom is here in a few areas. The bottom was actually here about a year ago in certain pockets. But still there are lots of places where it's still cheaper to rent than it is to buy. I take my hat off to Patrick for acknowledging the changes in the economic forces.

Most of you guys, Patrick included, are from CA. So the market most oftenly discussed here in this site is SF bay area market. Tax law amd prop13 is applying to them. So, Patrick think, this "market" situation now is half bottomed out and the other half is tanking or even going up. Patrick can say the market is splitted.

It should be "housing correction forum" or "splitted housing situation forum" rather than plain simple no charm "housing market".

No. I don't think Patrick is got sold by Peiking duck or something. His standpoint moves to the other direction as situation develops. That's certainly understandable. But Patrick, make sure that the market we're talking about is representing only small portion of USA market. People from the east, including me, often has no clue about it, and hard to follow what you guys are saying.

Peter Schiff, Patrick, Roubini and others are all appearing more in the media. They have earned credibility based on their logical assessment of what was going on in the last few years. The mainstream media now has an interest in what they have to say. They have been proven right most of the time. Those other people that appeared in the "Peter Schiff Was Right" video, whatever happened to them? Probably hiding in embarassment. Prices in some areas like San Fran and San Diego have stabilized, but most are still in free fall.

I find it rather surprising that anyone would fault Patrick for adhering to the formula and the principle that he has stood behind the entire time, namely:

Any particular house should not cost significantly more to buy than it should to rent.

This is the main principle. Prices have fallen, even crashed, in many areas. Rents have also declined many places. There are other areas where the price declines have been less dramatic.

Patrick uses an objective standard for value. If you want to disagree with rent-buy-equivalence as a principle, I suppose you can. But you cannot claim that Patrick is not a principled man.

He is, and any fame he sees along the way is well deserved.

I'm not going to second-guess Patrick about the forum name change.

There are reasons to change the name, as there are reasons to keep it. Historically, the forum WAS about the impending crash.

Now that the crash has occurred, one can argue about whether the forum name should be backward looking or forward looking.

I live in Tempe, AZ.
The price is still dropping.

This brand new 2400 sq ft house is selling for $270k.
http://www.zillow.com/homedetails/9120-S-Parkside-Dr-Tempe-AZ-85284/92425764_zpid/

Look at the graph, do you see an uptick?

Everyone wants to call the bottom but the books tell you not to - they say to call it after it happens. As we all know, January ought to be good with the billions being added to circulation; but, only the controllers of the Fed know what is in store for the USA over the next few years. From my sample set of people, housing is headed way down. People are struggling to buy food, not housing. That's average people. Rich folks obviously differ. Truth is, we probably have a bounce in some places. No bounce whatsoever in the couple of markets I watch. Heck, in those, you are lucky if you can sell. Period!

PPete says

The Fed IS the Government. I don’t know why we go through the process of electing Dems or Repubs. They both do the same thing to us. The Government sells debit (period). We get on the hamster wheel for 30 years to pay back the money in interest. They make money, we just preserve the capital in assets that remain neutral while they devalue the units we use to purchase every day things - like milk and eggs.
If the Fed did not loan money, the price of big ticket things would come down to what people could afford to BUY. Instead we build massive McMansions and spend ridiculous amounts of money on things we don’t really need.
So, forget buying a Prius and telling everyone how you are saving the world. Just get a smaller house and live a more reasonable lifestyle. Stop borrowing large amounts of money making the Fed rich.
I look at all the people who cash-out-refinanced a few years ago to go on massive family Disney cruises and trips to Hawaii. One lady we know cashed out and spent $35K on a 3 week vacation. She couldn’t afford it, but she thought she could.

The Fed is the government. That is very true and very disturbing to mainstreet.

xenogear3 says

I live in Tempe, AZ.

The price is still dropping.
This brand new 2400 sq ft house is selling for $270k.

http://www.zillow.com/homedetails/9120-S-Parkside-Dr-Tempe-AZ-85284/92425764_zpid/
Look at the graph, do you see an uptick?

Many homes in Reno are under 100 bucks per square foot, yet with only tepid demand. And if HOA's are too high, these properties are in big trouble here.

Hey, no con.

I agree, the housing collapse can only fall so far. At some point it reaches the bottom and starts to recover. Do you expect Patrick to continue to claim housing will collapse forever, even past Zero? You obviously not very bright John.

It is all about opinion. Patrick may buy today and still be sure of further price declines. After all no one knows when the bottom will be(but most here are sure that it is far off for properties priced 850K-950K+).

bubblesitter says

It is all about opinion.

I believe Patrick stated his position is based on the math. If the math works out where it's cheaper to Buy then Rent, Patrick say's Buy now. Sure housing may or may not fall further, but the math says it's a good deal now, so go for it. The math can not predict weather or not the house will be cheaper tomorrow or more expensive. That's where people opinions come in.

montly rent x 12months x 15yrs is my mantra. (I'd still rent)

Thanks Patrick hang in there. It has been a nutty year.

Hey is that a light at the end of this tunnel? ( whooooo whooooooooooooooot!!!)

maxweber says

Everyone wants to call the bottom but the books tell you not to - they say to call it after it happens.

That is a beautiful statement. And so true.

Wow, with Google's 10% across the board pay raises then this surely justifies higher prices in Google land! Patrick may be on to something here...

Max, that's a sure signal the job market is improving overall (in the valley) and not specific to Google. As soon as the layoff cycle ended, salaries have risen.

maxweber says

Wow, with Google’s 10% across the board pay raises then this surely justifies higher prices in Google land! Patrick may be on to something here…

You can verify by talking to any headhunter or recruiting firm in the valley, and they will tell you that compensation at Google is far less than most other local companies. The "privilage" of working at Google doesnt mean more salary. Lower salary means lots of other 'perks'.
The 10% is a response to people leaving. Besides, Google is an advertising company! Nothing more nothing less! Of the three people I know who went to work there, two left for better opportunites. "Long hours but little to show for it."

SF ace says

Max, that’s a sure signal the job market is improving overall (in the valley) and not specific to Google. As soon as the layoff cycle ended, salaries have risen.

You need to have alot of things happen to make the local SV economy go to an upswing. Alot of depends on other industries who will put orders in goods and services we provide. You need to look to them as they recover first, and they make the determination on how much new capital spending they will allocate to budgets.

John Bailo says

"Why all the backpedaling? Have we been set up to “trust” Patrick, so that when he says jump, suddenly we all panic and start buying houses like mad?"

A very deep and cunning conspiracy if there ever was one. Has Jim Jones taken over Patrick's body? Are we all going to be given the order to drink Kool-Aid?? If and when that happens, I'm only going to pretend to drink.

Patrick is correct on his RE market analysis. I, and others my disagree with some of his political commentary, but that doesn't make him wrong about his analysis.

Rock on Patrick!

RayAmerica says

A very deep and cunning conspiracy if there ever was one. Has Jim Jones taken over Patrick’s body? Are we all going to be given the order to drink Kool-Aid?? If and when that happens, I’m only going to pretend to drink.

lots of folks have drunk the kool-aid, some are still drinking it. anyone throwing money into a devaluating asset, "my home is underwater but I'll put in a new kitchen, new bath, and do the work myself it will add value." OH YEAHHH!

keeping the VA JAY JAY happy is hard work!

Its a better time today to buy in Miami alrighty, just dont trip and fall over the dead bodies.

But we sure have some room for more corrections when it comes to the SF Bay Area.
..... First one in (1998) Last one out (201X)

SF ace says

Max, that’s a sure signal the job market is improving overall (in the valley) and not specific to Google. As soon as the layoff cycle ended, salaries have risen.

cisco had a terrible forecast. they are considered a bellwether, because of it's broad reach:
http://finance.yahoo.com/news/Ciscos-dismal-outlook-stuns-rb-1156675289.html

"The world's top manufacturer of routers and switches forecast revenue growth of 9-12 percent in fiscal 2011, well below the 13.1 percent analysts had expected on average.

A projection for 3-5 percent revenue growth in the fiscal second quarter -- the current period -- also fell far short of Wall Street's expectations for 13 percent."

It was HORRIFIC! Anyone would dare say 9-12% growth was acceptable is in this country is a FOOL!

pkennedy says

“The world’s top manufacturer of routers and switches forecast revenue growth of 9-12 percent in fiscal 2011, well below the 13.1 percent analysts had expected on average.
A projection for 3-5 percent revenue growth in the fiscal second quarter — the current period — also fell far short of Wall Street’s expectations for 13 percent.”
It was HORRIFIC! Anyone would dare say 9-12% growth was acceptable is in this country is a FOOL!

you seem to not understand what a forecast is....

ptiemann says

pkennedy says

“The world’s top manufacturer of routers and switches forecast revenue growth of 9-12 percent in fiscal 2011, well below the 13.1 percent analysts had expected on average.

time for Thomas to quote the “incredible shrinking silicon valley” (M&As)
haven’t seen that in a few hours.

Well, is he right or wrong?

Having a ~dozen or so friends at google, I can assure you it's not what it's cracked up to be. One is incredibly wealthy, the other ~11, not so much.

mike4518 says

you seem to not understand what a forecast is….

Huh? Of course he does. You don't seem to understand the difference between a "terrible" forecast and a good forecast that doesn't meet Wall St.'s lofty expectations...

CrazyMan says

Well, is he right or wrong?

I think the jury is still out. What Thomas doesn't understand is that # of public companies has only a weak correlation to # of jobs...

tatupu70 says

mike4518 says

you seem to not understand what a forecast is….

Huh? Of course he does. You don’t seem to understand the difference between a “terrible” forecast and a good forecast that doesn’t meet Wall St.’s lofty expectations…

that doesn't make any sense

mike4518 says

tatupu70 says

mike4518 says

you seem to not understand what a forecast is….

Huh? Of course he does. You don’t seem to understand the difference between a “terrible” forecast and a good forecast that doesn’t meet Wall St.’s lofty expectations…

that doesn’t make any sense

What don't you understand? A terrible forecast would be expecting to lose $5B next year. Expecting to increase revenues between 9-12% next year is not terrible, no matter what Wall St. may have been expecting.