patrick.net

I ran into this attitude also back then. But I also thought in 1999/2000 real estate was in a bubble. ( I was horribbly wrong, I did not see 9-11 and the money printing tsunami/perpetual ZIRP coming at us).

Who could have predicted 9-11 and the feds response (money printing and ZIRP?). No one. BUT it was not that hard to see house prices triple in 5 years is an unsustainable situation when wages were basically flat.

Looking back at the last 10 years I will say this: Bin Laden won the war on terror or at least made a huge dent in our ass. How much longer can the feds sustain 10,000 military bases and all the Wars On Everything? Were gonna find out.

of course everybody has 20/20 vision in hindsight. You knew exactly when the bubble would peak.

I can probably pull up a few examples of houses selling at 2007 prices
or higher. Others have lost half their value. it all depends on location.

toothfairy says

of course everybody has 20/20 vision in hindsight. You knew exactly when the bubble would peak.

Um no, it was about whether there was a bubble or not. A fucking LOT of people saw it, but if you tried warning somebody who was intentionally ignoring it, they lashed out at you like you were trying to stop them from making a winning bet at the tracks. There was a lot of hostility and condescension from people who prided themselves on the sheer volume of money they were borrowing for a purchase they did zero homework on. That's not a hindsight observation, it was obvious and rampant.

@klarek

>LOT of people saw it, but if you tried warning somebody who was intentionally ignoring it, they lashed out at you like you were trying to stop them from making a winning bet in their tracks.

Not everyone, but yet all too often true this was (many can vouch for that on this site).

Sold in 2005 but had no support about the decision from my husband. The home we sold was sold again in 2006 for an increase of $100,000. The ONLY place I could come to was patrick.net with like minded people. No one, and I mean no one, was selling their home and renting.

The home we sold is now worth about 35% less and we are still renting. Big dilemma is where to buy. Thinking of going outside of the U.S.

klarek says

A fucking LOT of people saw it,

I agree. I have a Business Week magazine from 2005 with a small article suggesting that people put away more savings(like follow normal six months of expenses in the bank guidelines) because the housing market couldn't reasonable go up at the rate it was going up at the time.

robertoaribas says

EVERYONE said I’d gone crazy, including my now ex-wife. It set off a lifestyle change as well, and I sold my bmw convertible and bought a honda civic. I started riding my bicycle to work and eschewed all signs of wealth or success. f everybody who thought you had to own a home in a certain place or drive a certain car.

Yes! Really happy reading this description of your choices. Really cool. Being outside social norms is often viewed as "crazy" by those in the norms.

Aren't Hondas great!! I park a purple one in a lot filled with new BMWs every day I drive, insread of walk, to work.

Saw the whole housing market collapse coming in Sept '05, put house on the market that month. Sold in Jan '06 for $465K, paid $186 in '98. Rented back from buyer as they needed to sell property in northeast before they came west. That was supposed to be a year, turned into 3 years and they lost the house to forclosure. I bought it back at the Trustee Sale for $173K. It pays to read the blogs, I have a masters degree in this housing mess due to smart people that are willing to share their knowledge.

MountainMan, are you saying you bought your house back at a price lower than what you bought it at in 1998? Did the banks suspect fraud since you were the original owner?

MountainMan57 says

smart people that are willing to share their knowledge.

Good for you. I assuming this must be an inland area as it is now way below 1998 price.

robertoaribas says

klarek: unless mountainmain short sold his home, there is nothing to prevent him from buying it back.

Not disputing that, but look at it from the bank's perspective. Previous owner becomes tenant, renting from new owner, and new owner can't keep the place which gets sold back to the tenant at a price below what he paid over a decade ago.

I have no problem with it, I think it's great. Just knowing how banks get conned daily by people short-selling to their friends and family, and was curious if this guy had to deal with any diligence from the banks.

I was asking him a question, not making an accusation.

a old landlord of mine sold her house in 2006 in San Francisco.

a shitty house in Sunset, on 41st Ave for 850K.

She is a RE broker. she said "i think the price has stopped rising".

She was right.

yes, fortunate to sell. I am still renting. The home I sold is at least worth $600,000 less than I sold. that is a 30% drop

one for the road says

yes, fortunate to sell. I am still renting. The home I sold is at least worth $600,000 less than I sold. that is a 30% drop

Hmm, but I heard RE is a very good investment?

Wanted to sell in 2005 for what realtors conservatively estimated at a sale price of $750,000; wife didn't want to move but eventually convinced her and sold November 2007 for $525,000. We bought the house June 1999 for $225,000. Since moving we have been renting a much larger home in one of the most desirable neighborhoods in our region.

lungdoc says

Wanted to sell in 2005 for what realtors conservatively estimated at a sale price of $750,000; wife didn’t want to move but eventually convinced her and sold November 2007 for $525,000. We bought the house June 1999 for $225,000. Since moving we have been renting a much larger home in one of the most desirable neighborhoods in our region.

Perfect example of how large the bubble was. A house bought during a fair market (1999) for $225k would fetch $750k during bubble (2005, not even the 2006 peak). That's a price increase of 3.3 times. By 2007, the price increase was only 2.3 times. Yet, most people resist the idea that the price will ultimately return to it's pre-bubble level of 1.0 times because that implies another 43% decline.

Dan8267 says

Perfect example of how large the bubble was. A house bought during a fair market (1999) for $225k would fetch $750k during bubble

Interest rates were over 8% in 1999.

In 2005 it was possible to get 1% teaser-rate mortgages. That's a significant reduction in the cost of money -- 8% of $225K is $18,000, more than 2% of $750K.

Suicide lending was about 80% or more of the cause of the bubble peak, 2004-2005. Things plateaued after the summer of 2005 tho.

The fraud was immense with this. That's how a strawberry picker could borrow $700,000 to buy a house in Hollister during the peak.

In what rational world does a strawberry picker walk out of a bank with $700,000?

Troy says

In what rational world does a strawberry picker walk out of a bank with $700,000?

a) strawberry picker is a bank robber
b) strawberries are made of gold
c) 1) bankster loans out money it never intends to receive back, since the bondholder is on the hook anyway
2) find patsy who can state enough household income
3) ???
4) PROFIT!

You are my hero. I pretty much did exactly that.

I sold my condo 2005, cashed in, rented for 5 years. Now bought a SFR in late 2010. This one single decision increase my networth by $250k+. Also bought a rental property with positive cashflow (all cash) during this time.

I also thought about selling my lexus and replace with a hybrid. But then, it's not cost effective to do so... so I am now still keeping my 10 years old lexus. Good, reliable and trouble-free.

toothfairy says

reach

robertoaribas says

I sold my north scottsdale home in 2005 for twice what i’d paid for it 3 years before. I moved into one of my prior rental properties, and sold one other rental property shortly after that. $300k after taxes out of the market.
EVERYONE said I’d gone crazy, including my now ex-wife. It set off a lifestyle change as well, and I sold my bmw convertible and bought a honda civic. I started riding my bicycle to work and eschewed all signs of wealth or success. f everybody who thought you had to own a home in a certain place or drive a certain car.

masayako2456 says

I also thought about selling my lexus and replace with a hybrid. But then, it’s not cost effective to do so… so I am now still keeping my 10 years old lexus. Good, reliable and trouble-free.

Good decision. I never understood the people who replaced late-model SUVs with slightly more fuel efficient new large/mid-size cars as an overreaction to gas prices at $4.

Let's say you drive 15,000 miles/year, the prior gas price was more like $2.50, and the SUV gets 15 mpg vs. 25 mpg for your new car. That means you need 1000 gallons/year for your SUV and 600 gallons/year for your new car.

At $4, your new cost is $4000/year for the SUV vs. $2400/year for your new car. If your SUV is 3 years old, even assuming you would have kept it for 7 more years for a total of 10, you'd probably be better off with the SUV. You could have easily lost $11,200 between trading in your SUV at the bottom of the market for used SUVs (trade-in prices are typically several thousand below private party or retail Blue Book) and the instant depreciation hit your new car took (could easily be 20% on a $25K car), plus in many states, sales tax (nearing 10% in parts of California). If you planned to keep it fewer years, the calculation is even more in favor of keeping the older car.

Reminds me even if someone put in a repair/maintenance of say $300-400 a year that's still less money than buying something new. Nothing wrong with a hybrid but to jump ship just because an extra $1 a gallon just isn't worth it.

Reminds me someone I used to work with is on welfare. He had a new Rav 4..not a bad car..for some reason he traded it for a three year old H2 hummer..I have no clue why (it was a even trade). So now he gets half the mileage he had because...

Despite some repairs I would never buy a new car. Fewer problems? Well ford had 8 recalls on the focus when it came out. Reminds me cash for clunkers wasn't exactly a good idea. the new cars only had 0.8mpg more on average then what was turned in.

mdovell says

Reminds me even if someone put in a repair/maintenance of say $300-400 a year that’s still less money than buying something new.

Even if you have a high mileage car that requires $1000/year in maintenance, that'd be far less than something new. I've had cars I basically ran into the ground that probably only required about $500-800 in maintenance/repair per year. Even when I dropped $400 on a big repair, it wasn't a big deal.

Thanks for all stories so far! Most people did very well if they didn't purchase again soon afterwards (no surprise)...

in 2005, my parents sold two properties (one in san pablo, ca, one in the sonora, ca). they did very well. but then to defer paying capital gains, they did a 1030 exchange and bought in elk grove, ca. it's become an albatross.

i thought about buying circa 2007 in elk grove, ca - it was a 3/2 SFH that was listed for 300K. that same house would probably fetch ~120K right now.

Wow, so the Elk Grove decline is about 60%!

Bought in 1999 for $330K @7.5%, sold in 2008 for $620K (might have gotten an extra $30-$40K the year before, but I rented the place for a year for $22K in profit). The place we sold is now worth maybe $500K. One down the street is pending at $350K.

Rented a big place for four years and bought again this past summer for $799K. Just refinanced today at 4.25% 30 year mortgage. Saw the bubble coming, but I've been fortunate with timing.

we sold our home in the east foothills of san jose in July 0f 2004 and have rented ever since. At first we rented private homes but were forced to move twice because the owners wanted to sell. (both homes have foreclosed since new owners purchased in 05 and 07) We now rent an apartment and feel very fortunate and free. The home we sold in 04 also just foreclosed.

Bought in 2003, and sold in Jan, 2009. If the bidding was truely a confidential process then why was all three bids over asking in a market that was already falling. They were all basically the same bid, so definitely something funny was happening. Crazy people and realtards. I check every now and then to see if the new owners are going to resell or default. They would be down about 100K at this point. Sucks for them, but good timing for me. I bet the realtor got deleted from their speed dial.

I've rented ever since and will continue to rent until Patrick tells us he bought. ;)