patrick.net

Stuck

Let's just cast aside the price decline argument for a moment (because I think it is already a done deal, just matter of velocity), and talk about the area.

I am not a big fan of zip codes, I care about the location, the area. Out of the cities that you mentioned, they should fall into two categories: those in the foothills and those not. Mountain View and Sunnyvale are completely in the middle, just as East Cupertino. Evergreen, although further away, is actually in the foothills. Most of Milpitas is on a dump right in the middle of the polluted bay. There is a very substantial price discrepancy between east Cupertino and foothill Cupertino, other Fremont and foothill Fremont (known as MSJ). Schools, city names come and go, location is forever (not diamond), and there is a reason why good location breed better schools.

It is hard for me to judge San Ramon because I've only been there once, but from very preliminary impression it extends too much into the east where there is no natural barrier which means there are plenty of supply. You always want to find places where there are natural barriers like mountain and river so that you have a chunk of green belt at the back, which also means constrained supply.

I think for the western foothills (the conventional prime area of the Bay Area), the best value is actually in Almaden, where the schools are good (API 850+) and facilities fairly new. It is a bit further from the major job center, but closer than Evergreen, and there are no bad spots along the western foothills all the way down from the peninsula. You know part of it will become another Saratoga south of 9 some day as the valley expansion goes southwards. In fact, there are already multi-acre mansions dotting the western Almaden foothills and it is a matter of time that it turns into another upscale neighborhood.

If you check the crimereport.com (which unfortunately does not cover San Mateo county), you actually see how crime rate drops off as one moves towards the foothills.

That's why I think even western Redwood City (emerald hills) is better than, say, Sunnyvale.

Jimbo :

I am not missing the point at all. The proximity to wealth generation is important - that's a trivially true statement. Bay Area prices have been higher than countrywide averages for years. For a good reason. I don't see that changing. That's NOT what I was arguing.

But this proximity definition keeps changing. A few years ago, Tracy - not to speak of Los Banos - was also considered "close" to job centers. Now you are not including even Dublin in there and want it to restrict to even smaller cities.

I cannot accuse you of being delusional because you are at least accepting the declines - may be it's too hard to deny it now. And you personally may not have changed your tune. But remember this. We were first told that Bay Area prices can never go down because of proximity to jobs. Now the definition of Bay Area is changing when reality is in front of us. Instead of seeing someone admitting that they were wrong in being so blatantly bullish, we just see this evasive redefining of Bay Area boundaries.

The bulls were never wrong. They were simply talking about "core" areas. Hence my frustration.

Stuck, you've gotta stop going to Zillow, man. ;o

Seriously, do you really expect a bunch of realtors and brokers to admit that they were wrong about Bay Area real estate? Their main reason for being on Zillow is to pick up new leads. If they admitted that their predictive powers were zero and that they were shoehorning migrant workers into 2/28 no doc neg am loans to make quota, who the heck would hire them? Far better to hint that they know where the best areas are. Want to hold your value in this frightening market? Just ask Joe/Jane/Tim/Martha/Ranjeep! They know the secrets of where to buy!

Now is a great time to generate a commission (tm)!

Er, I mean, now is a great time to buy or sell a house. In the core! Because only realtors know where that is! If you keep sitting on the sidelines, you're going to miss the greatest buying opportunity ever in the Bay Area (at least until next month)! :twisted:

BAI

Thanks for the harvard gal video, I've seen her somewhere before. I'll look forward to it.

Looks like the retailer Linens and Things is declaring due to slowness in housing. I don't know how many stores they will endeavor to keep afloat, but unquestionably they will use this to bail on their underperforming locations. That's a major tenant in many centers, reduction in traffic for all the remaining tenants.

Let the great shopping center exodus begin! :-)

Speaking of shopping center exodus, New Park Mall in Newark which draws from Fremont and Newark residents in the past month has lost two tenants, Wilson's Leather and D.E.M.O. And Mervyn's is moving out as well to their own building across the street. The demise of this mall is well under way.

Stuck,

Dublin is toast (or will soon be); I need to go to the archives and see where I became a Dublin defender (which, it seems, you associate with me). Maybe it is the East Bay thing. Keep posting data, though, as it is interesting to see the wave hit and crest the hills. We are left to man the barricades in Fortress East Bay (BAP: Berkeley, Albany, Piedmont); it's urban core (?), not a lot of new construction and decent schools as Jimbo says. :-) I do follow Jimbo's line of reasoning, and we are similar, in that, we both decided that the sun doesn't rise and set on the SFH. We wanted to live here (where ever in the BA that may be) for the reasons Jimbo enumerated, but didn't sacrifice our firstborn in order to do so. Quite liberating to buy unconventionally. Yet, I still break out in a sweat if someone utters pre-2000 pricing (I mean, things are going to get bad, but not that bad -- are they?!)
Is the Bay Area special? Yeah, but only in the way IO and option ARMs were the product of choice the past couple of years; we're all Alt-A now.
I still remember riding the train (at the dawn of the 21st century) and this women talking about buying another (rental) house in Fremont. I couldn't for the life of me figure out how to get something like that to cash flow. I'm sure she and her husband did okay back then, but the decline of exotic mortgages means there is now nowhere left to hide. We're all one REO away from a lower comp...

Brand :

I was just having fun at the Zillow board. I don't expect those Realtors to accept anything. All the bulls (like TOS here) simply run away when faced with hard data.

Surprisingly the Realtor on the Zillow board was quite honest. These days it is quite fashionable for the bulls to agree that bubble is bursting but severity is still open for debate. Sometimes it's the depth, sometimes it's duration and sometimes it's "special areas". Admitting that we are f*cked is not what I expect them to do, because they are the ones who were to some extent responsible for the mess.

EBGuy :

My apologies for not reminding you the context. You were not defending Dublin at all. We were discussing what the Case-Schiller futures were predicting. So I came up with a prediction - a very specific - just pulled from my ass ;-) Well, not quite, I simply based it on what was happening pre-bubble.

I have to admit that I was shocked to see that prediction coming true so fast. Even more because it was just a random guess. Hence I mentioned it.

Jimbo
I read all kinds of things. In my case however, it is certainly *not* a sign of intelligence. Hence my 'call sign'. :-)

http://tinyurl.com/5hp3th

Is this type of news just so familiar or the amount so small ($15 Bln.) that nobody even talks about new losses at SHITIBANK and ML?

Time to go back to the trough - http://tinyurl.com/56dg4k

Two links and its moderation hell for you!

NY Times piece identifying renters as another "victim" in the housing "crisis"

http://www.nytimes.com/2008/04/13/realestate/13cover.html?_r=1&oref=slogin

ON a cold evening in March, Desiree Dookhoo was at home in Ozone Park, Queens, studying for a nursing exam, when she heard someone trying to open her front door. She demanded to know who was there and threatened to call the police.

"This stimulus package is timely, targeted and temporary and represents an important first step toward stimulating the economy."

Translation: I want to placate my smug constituents with their tony Palo Alto digs. The outrage that Peninsula RE should ever fall!

Years back, I shared an office building with Eshoo, and ran into her entourage a few times. My impression was her staff was of lower than average intelligence--but that's probably politics as usual, lol.

The stupidity of entrenched entitlement isn't split along political lines. We're now paying for decades of self-indulgence from the consuming wage-earner to the smug, blissfully erroneous exec. G-d save us from all this stupidity!

G-d save us from all this stupidity!

No. God save the Queen. Let's move to Canada. :)

The Almighty will save your soul. He ain't gonna do much for your checkbook.

:)

The queen will surrender the crown and sceptre to God Almighty, from whence they came. The UK components will then enter as sovereign states into the Great United States.

The "conservatives" are calling for The Fed to just start printing money and opening up the nation to inflation, rather than risking that an Obama Administration would regulate the financial industry. I kid you not:

http://preview.tinyurl.com/3epmt3

I actually always thought that a period of inflation was the most likely alternative to the aftermath of the US government loading up on a bunch of loans from foreigners. Now we have the AEI arguing for this in the opinion section of the WSJ.

Inflation is still preferable to more taxes.

I agree with many of the arguments in that WSJ article. Policy or not, inflation is the end game. So the distinction is whether to announce it or do it in a stealth way as has been done till now. The risks in that approach seem lesser of the evils to my non-economist mind. And US is in a position today to inflate and get out of all types of debt. Tomorrow it may not be able to pull that off.

Nationalization of all the mortgages is perhaps a forgone conclusion. But that by itself is hardly going to help.

Higher taxes lead to inflation and deceptive growth since savings lose value. In another word stagflation.

Despite what people say, taxes cause inflation and hurt profits. People pay more, to make less. It sucks all the way around.

IMO some effort is warranted to keep the money supply flowing, but interest rates should be allowed to float, and savers should be the ones supplying banks with the money so that they aren't hurt by the phenomenon of below inflation rate interest rates. Banks should be competing with each other to get savers to put their money in, not just running to the reserve to perpetuate a ponzi scheme by exchanging bad loans when the market clearly wouldn't pay anything for them.

Policy or not, inflation is the end game.

No, deflation is the endgame.

Despite what people say, taxes cause inflation and hurt profits.

Absolutely. Our hero, Ronald Reagan, cured stagflation by cutting tax.

Flat tax!!!

Compare this with TurboTax. :)

http://www.cse.org/flattax/index.php

Of course I disagree with you: we need to raise more taxes to fix our collapsing infrastructure and to stop borrowing so much from foreign powers.

But inflation is preferable to nationalizing the banking industry, as I am sure you will agree.

Banks should be competing with each other to get savers to put their money in, not just running to the reserve to perpetuate a ponzi scheme by exchanging bad loans when the market clearly wouldn’t pay anything for them.

I posted this last week but didn't get any comment (it was near the end of a thread). At any rate, the bid-to-cover ratio at the last TSLF auction was less than 1. Are we turning a corner, or just taking a breather before the rest of the SHTF.
Primary dealers submitted only $33.95 billion of bids for the $50.0 billion of Treasury securities auctioned, the Federal Reserve said. The auction is part of a new $200 billion program aimed at helping Wall Street dealers, called the Term Securities Lending Facility.

Of the three TSLF auctions held so far, this auction was the only one where the amount on offer exceeded the amount that was bid.

Of course I disagree with you: we need to raise more taxes to fix our collapsing infrastructure and to stop borrowing so much from foreign powers.

We need to privatize our collapsing infrastructure.

As long as we have a strong military, it is fine to borrow from foreign powers. LOL :lol:

But inflation is preferable to nationalizing the banking industry, as I am sure you will agree.

Of course.

Actually Jimbo, I don't disagree with you. Those purposes, again IMO, are legitimate government expenditures. MORE funds are desperately needed in the areas of infrastructure at all levels.

My problem with taxes are when they are used for wasteful purposes, like 30 billion for 'counseling troubled borrowers.' Like I said, investing that money in solar with private partners would supply a pretty nice percentage of the total residential electric demand.

No, deflation is the endgame.

Depends on when your game ends ;-)

But to quote Bill Fleckenstein, "In a world of fiat currencies, all roads lead to inflation."

My problem with taxes are when they are used for wasteful purposes, like 30 billion for ‘counseling troubled borrowers.’

Taxes feed wasteful purposes. The *only* way to cut wasteful spending is to cut taxes.

MORE funds are desperately needed in the areas of infrastructure at all levels.

If we privatize the infrastructure, the market will fix it efficiently. Gee, even I am tired of cheer-leading for Free Market. :)

Higher taxes, significantly higher taxes, are now an inevitability as our fed, state, and local governments are not going to be able to borrow as easily and cheaply any longer. An era has passed.

Budget deficients just became significantly more difficult to manage. We are facing a situation where massive spending cuts are likely to be paired with significant tax rate increases.

Welcome to the new United States of America. :-)

It may take a couple few years for this to really begin to play out, and there is no way to put lipstick on it.

Auction Rate Securities courtesy of NYT

http://www.nytimes.com/2008/04/13/business/13cash.html?pagewanted=1

But even though Wall Street heavyweights and major corporations have been stung, many of them also appear to have bailed out of the market well ahead of individuals. At the end of 2006, institutional investors held about 80 percent of all auction-rate securities issues, according to Treasury Strategies, a consulting firm in Chicago. At the end of last year that portion had fallen to just 30 percent.

“A number of corporations understood there was a rising threat to their securities; there had been failures and warnings,” Anthony Carfang, chief executive of Treasury Strategies, said in a conference call late last month.

Lewis D. Lowenfels, a securities lawyer at Tolins & Lowenfels in New York, represents several investors who are stranded in auction-rate securities. “If the evidence shows that large corporate clients were being advised to unload these securities at the same time that the investing public was being counseled to purchase the same securities,” he said, “one begins to slip over the line from questions of due diligence and suitability into the realm of securities fraud.”

Budget deficients just became significantly more difficult to manage. We are facing a situation where massive spending cuts are likely to be paired with significant tax rate increases.

With enough spending cuts and privatization, we can even use some new tax cuts.

The reality is that if we cut tax, wasteful spending will have to disappear. On the other hand, essential programs will be picked up by the private sectors and managed efficiently.

People need to understand that they are entitled to nothing.

The reality is that if we cut tax, wasteful spending will have to disappear.

That is not how it has worked so far. All that has happened when taxes are cut, is that borrowing has shot up.

We might be having to finally pay the piper for 20 years of Republican deficit spending though. Through in the increased cost of borrowing to the increased cost of food and the increased cost of gasoline and a lot of people are going to be seeing a lower standard of living.

Through, throw, throuwgh. I think the scotch is finally catching up to me. No more posting for me tonight.

Here's another guy's idea to fix the housing mess.

http://www.nytimes.com/2008/04/14/opinion/14leamer.html?ref=opinion

the last thing the Fed should offer is low interest rates. But that’s what it did — now it doesn’t matter what the rates are; not even low levels can entice buyers when house prices are declining.

The only solution is for the federal government to offer a temporary 5 percent tax rebate — up to $25,000 — for first-time home buyers.

A little bit of wisdom and a bogus plan for action. Don't you like how academics say things like "the ONLY solution...."?

Did anyone read the recent comments Paul Volker made about Ben Bernanke? If we must have a Federal Reserve why couldn't we have a Fed Chairman like Volker? Instead we get bend over Ben the bankers bitch! I wonder if his banking industry cronies are at least giving him the pleasure of a reach around? The rest of us sure aren't getting one!

The World Bank is making noise about how the "international community" should help out in regards food prices.
http://biz.yahoo.com/ap/080414/finance_meetings.html
How come they don't include OPEC in their "international community"? If OPEC lowered prices to $50 per barrel, the food crisis would go away.

The only solution is for the federal government to offer a temporary 5 percent tax rebate — up to $25,000 — for first-time home buyers.

Hopefully there will be no income limits.

I hate it enough when there is a demand-side tax rebate for consumers. I absolutely hate it when I don't get a penny of that rebate. We are low-income worker bees and we cannot even deduct student loan interests!

Those who support Democrats should get this into their heads, they think you are "making too much money" and they will give your money to someone else. YOU WILL NOT BENEFIT FROM THEIR POLICIES.

A little bit of wisdom and a bogus plan for action. Don’t you like how academics say things like “the ONLY solution….”?

The only solution is to dismantle the welfare state.

The World Bank is making noise about how the “international community” should help out in regards food prices.

They can help out by producing more food. But that is simple supply and demand, right?

Robert Zoellick on Sunday said the international community has "to put our money where our mouth is" and act now to help hungry people. "It is as stark as that."

The natural solution is to let them eat cake. Giving them money to buy food is like giving FB's cheap loans to buy homes. Increasing food supply is the most sensible option.