patrick.net

But he favors granite over corian… hmm…

I'm sure Corian's a fine product, but I also tend to prefer natural/traditional materials over Anal Voodoo Counter Products (AVCPs). Thanks, Jack!

np, Jack. I have purged the offending duplicate post (kept the longer one).

It used to be: If you get a fixed rate loan, and can afford the payments, and can stay in the house 5 to 10 years…” blah blah blah….Now it is more like: If money is NO object, and you can buy the house outright, and you are positive that you are not moving for at least 45 years, it may make sense to buy!

Sing it, my brother!!

Yes! Jack is Prime

@Jack
Are the bull’s arguments really all that terrible these days?

Nope, but it's just harder to fitler out the reasonable ones.
We might be witness to the leading edge of RE pessimism (panic?), where moderate bull arguments will get drowned out. I'm sure there still markets where homebuying is a reasonable decision...I'm just not in one of them.

You’ve been living in the BA where home prices have increased 10% to 20% forever and ever and ever.

Your implication sir, not mine.

Any gut feels for where the CPI might go?

I’m sorry that you read a hidden implication into a simple statement about factual past events.

Not trying to read anything into your statement, I'm just not aware of 10-20% increases being the norm. Aren't increases like that short term in nature? And isn't it more likely that after several yearly increases the rate will start to drop, go flat or even decline. I know that nationally the housing market tends to stay positive, but various areas of the U.S. have had numerous boom/bust cycles and unless I'm mistaken the B.A. has fallen into this category.

This is just intuitive, nothing more, but in the last month that I have added bubblehead web sites to my list of regular surfing, it seems to me that a great many of them (bubbleheads) are regular equities traders. I wonder if that is true, and if that might account for an aversion to owning an extremely illiquid asset?

Cheers.

I don't know if people around here have an aversion to property (me, I like property, particularly at the right price), but maybe we have analysed the RE market using fundamentals. I like to think that people that make these assessments usually have an interest in the equity markets as well.

Others here have probably lived (or read) through boom bust cycles and have comments based on those experiences.

Mr. Right

Thanks for your very gentlemanly answer, it is much appreciated. I have to admit, I am not someone who is comfortable jumping into RE after the trend has been up as long as it has currently. But I too think that RE is a great investment at the right time. My husband and I are not heavy equity traders either, just not inclined to buy RE right now.

Even in the last crash, change took time.

Change in median price takes time. Change can happen quickly if you need to sell quickly.

You mean reasonable arguments to buy real estate are now being drowned out by unreasonable and frivolous arguments by my fellow bulls?

Not under my watch. ;)

@Right

You’ve been living in the BA where home prices have increased 10% to 20% per year and don’t like that trend line?

You keep repeating that 10-20% figure; what are you referring to exactly? A specific location--a housing segment? Do you invest in housing, where that's what you expect long-term?
In our last exchange, I pulled historical stats on the subject of San Diego and posted them here (scroll up somewhere). I don't recall any response then; you can pursue Bay Area stats for your own answer. If you're a serious investor, I'm sure you'll do that yourself.
Oh, btw, median home prices in my locale have averaged +34% annually since '99, so 10-20% is obviously out of context in my case.

I hope you know I am just having fun (PURGE)

Really? I was really mad and I hated you!

Really? I was really mad and I hated you!

JKJ (Just kidding Jack) ;)

No offense was intended; I stated an opinion re: sustainable growth and you expressed a contrary opinion, which I appreciate but didn’t think needed further exchange as the page tends to turn pretty quick on the good ol’ inet.

None taken--all theories, really. We'll know eventually.

Hi MP,
I hope news was not wishing you harm. I think he said that it would suck for you and probably others I would guess. Maybe this is why there is aggression between bulls and bears. Might be the bulls think that the bears are trying to wish loss to the bulls. Far from it. I think it would be financially bad for both camps if RE busts. Due to the fallout this would have into the broader economy.
Cheers.

So mean of you to wish harm on me! Yes, San Francisco prices just increased by a lousy 2.2% month over month, and hits another record high…. but to wish me harm is so cruel.

I mean, i know I only made 10% on my equity in one month (120% annualized?), but come on, play nice!

I made 40% on my equity in less than one month (480% annualized) on HedgeStreet going long SF median price. Does that make me a better investor? ;)

(Too bad. The liquidity on some HedgeStreet instruments can be exhausted with as little as $100.)

WARNING/BAN RULE STILL IN EFFECT:

"From this point on, the next clown to post a personal attack, insult or gratuitous taunt directed at another blogger gets his post deleted with a warning. Same goes for anyone who repsonds to it with another taunt/insult. Do it twice and you get banned."

Some of the recent comments here, while within bounds, are starting to get provocative. If you don't want to trigger a flame war and get booted off --along with your opponent-- I recommend staying well away from personal matters.

@HARM

Thanks for the above. I'm not a frequent contributor (I'm making this stuff up as I go along!), but if this blog continues to devolve, I am sure I speak for many lurkers in saying that I'll stop reading completely. This thread was truly an effort.

Btw, I have "cleansed" this thread of most of the objectionable material --on both sides.

You mean reasonable arguments to buy real estate are now being drowned out by unreasonable and frivolous arguments by my fellow bulls?

Not under my watch.

Excuse me, Peter, but personal matters called me away last night. I'm sorry I wasn't here to nip this thing in the bud, but remember that Patrick is always an email away.

Sorry for the wording above... My point is that this blog would lose many people who would have something useful to contribute, albeit occasionally.. The ratio might be low, but the numbers are large. Online communities can't survive without new contributors, and most of them start as lurkers. If they're turned off by pissing contests between strangers, they won't stick around... I don't mean to overemphasize any individual's (especially my!) importance to that, but...well.. when the regulars aren't having fun, the peripheral people are hating it. That's all. : )

quesera, you have nothing to apologize for. If anything I owe you an apology. I completely agree with you and have no doubt that the vast majority of lurkers AND regulars here also agree with you.

Harm,
An idea for a new thread, hopefully something with a brighter side:-
What would be the ideal type of property for the blogsters and price willing to pay. (This should give an indication of future price support levels, and also indicate intangibles and their values.)

AntiTroll - I like your thread idea, and I think it's time to get other people with good ideas more involved in the process. Stay tuned...

I wonder if that is true, and if that might account for an aversion to owning an extremely illiquid asset?

I certainly prefer liquidity. For illiquid assets like real estate, I would be very careful about the entry point.

I find the ability to liquidate all my assets and investments independently and in a matter of minutes very comforting.

Options can be illiquid too. I remember holding short puts of a company when it was being raided by the FBI. Not fun.

(Not investment advice)

(...and, the conspicuously unspoken context of my above statements...)

Thank you to everyone who contributes a little and (especially) a lot to this blog. It is unique in its genre (investment generally, housing specifically) for the level of intelligence and mutual respect among disagreeing factions. I know that it periodically requires active moderation to keep it that way. You're doing a great job.

Please see new thread: "Lurker’s Turn".

I have started a new discussion thread by request of AntiTroll from Oz: Dream Homes"

What we need for this blog is a threaded discussion forum. Anyone used a good one lately?

We have a BAHC newsgroup on google:

http://groups-beta.google.com/group/BAHC

It is dead but we can resuscitate it.

I think 1% MoM increase is highly probable for SF though.

I think we may actually see higher MoM increases on medien price for SF in the near future as the market peaks before a correction.

MP.

Most landlords in San Francisco own multi-unit buildings, not condos. I own a 2-unit building and live in one, so the other is under rent control. This is why there are such political fights over condo conversion here: every apartment converted to a condo removes one more unit from rent control.

TICs are under rent control, condos are not. I know that is bizarre, but that is because Sacramento passed a law that removed all single unit owned properties from rent control, including both single family homes and condos.

Hope that clears up any confusion. I am hardly an expert at this stuff, but I know how it affects my own situation.

Cheers,
Jimbo

I guess, the secret to not getting too harmed by rent control...

Rent control harms everyone. It harms landlords in the short run and tenants in the long run. Perhaps we should repeal it.

Which is more evil: prop 13 or rent control?

The higher housing prices go, the less affordable housing is. Therefore, rents rise. It’s a beautiful thing!

Only if you have pricing power...

Your statement is apparently untrue at least for "sub-prime" locations. :)

C'mon, MP, I know you can give better reason than this.

I’m fully prepared to face the upswing in rental prices by raising my rent! That’s pretty logical right Rick? The higher housing prices go, the less affordable housing is. Therefore, rents rise. It’s a beautiful thing!

MP

If rents rise, so will CPI, then interest rates will need to go higher.

CPI won’t rise with increases in rental prices. Remember, CPI is inflation excluding EVERYTHING PEOPLE ACTUALLY PAY FOR i.e. oil, gas, rent, etc. I love economists

I believe CPI includes rent but not house prices.

Seriously folks, I really kid you not, rents are rising in The Marina and Cow Hollow.

I believe you... desirable locations have they own little markets. However, general markets in the Bay Area are not looking so good.

Actually, i have an example of a nice top floor 1,300sqft, 2b/2bath condo that just closed escrow today. Asking price a whopping $1.15MM, and it went for $1.25MM! Almost $1,000/ sqft for this place. Nice deck, and roofdeck…… but wow… that’s getting up there to what i paid for my 2,400 SFH back in January!

If property is valued at dollars / sqft, it would make sense to keep adding floors to your property (provided zoning allows) . I assume building cost to be something alot lower than $1000 / sqft.

It would also mean that a better deal would be to buy very small and then addon!

I actually have about 13 feet deeper i can expand into my lot to match my neighbors.

Remember that glass sun room you talked about? It will cost more than $250/sf though. :)

MP,

......and if all your neighbors are 2 stories, you cannot build a 3rd story.

Building costs = $250/sqft.

IT would even be worth your while to pay for your neighbours extensions. I'm sure they would not stop you then.