patrick.net

Here was someone’s dream Cow Hollow/Marina 2b/2bath, 1,300 sqft condo with deck that went for $100K over asking to $1.25MM. $990/sqft. Not bad! 3 week close.

Nice condo! The bathroom looks pretty bad though.

Wow. Even NRO financial is on board:

http://tinyurl.com/bhafl

Cheers,
prat

Jack-
I do like the Eichler concept, clean lines, indoor/outdoor integration....those designs were certainly forerunners in their time. I think they're great--if well maintained.
I'm less enthused by slab floors, possibly because I've always lived near sea level, areas of high rainfall, and want some distance between ground and floor level. The idea of plumbing sunk into cement bothers me as well.
Ah...the "bungalow" flip in SA? Well, yeah--it's a spectacle...$700/sqft...shocking!
Last I checked, it's still on the market (and not reduced) Good luck to them!
Seals...I've seen those guys as far up as Kentfield. Then there's bat rays, small sharks, otters, deer...it's a zoo over here!

CentralCali:
Well, it seems to me that it’s just getting worse and worse. I kept hearing 3 years ago to buy because I would get: “priced out of the market.” I just kept saying to myself “no”, the laws of economics will re-apply and things will sober up. They haven’t. They really haven’t.

How is inventory in your part of the state--going up? Here, I'm seeing rising inventory/lower sales. Eventually, I suspect that will "adjust" prices. So hold on--things could get better :-)

(not "investment" advice)

I’ve been following this bubble for 5 years, and I just keep saying: “sooner or later the fundamentals will start to apply again.”

Wow, CentralCali, you've been following this thing longer than I or probably anyone else on this blog has! No wonder you're feeling discouraged. I wouldn't give up just yet, though. We're already seeing rising inventory and slower sales in most CA cities, and slowing to flat appreciation in some (San Diego may be the proverbial "canary in a coal mine").

That said, I wouldn't expect the correction/crash to play out quickly --housing prices are notorioulsy slow/sticky on the way down-- or for them to return to 1996 levels. At best they'll probably only give back 30-50%, depending on the area, and this could take several years. If you absolutely *must* buy right away (don't see why), you might want to check out some not-so-inflated markets, in the Midwest or South (excepting FL, MD & other bubble-infested areas). I'd say renting's a FAR better bargain just about everywhere else.

"As housing slowdown takes hold in San Diego, experts differ on depth "
tinyurl.com/9azcp

"WSJ: Rise in Supply Suggests Housing Market Cooling "
tinyurl.com/8ub2n

"Bay Area Housing Prices Dip Slightly"
tinyurl.com/c2oco

"Home prices 'extremely overvalued' in 53 cities"
tinyurl.com/b649c

"Once again sorry for coming off a bit down this morning, but I’ve been watching this thing inflate for so long now, and it’s just starting to get to me. I mean, they are called fundamentals for a reason, right?"

Once again, (altogether now):
"ASSET BUBBLES TEND TO LAST LONGER AND GROW FAR BIGGER THAN ANY RATIONAL PERSON AT THE TIME WOULD HAVE THOUGHT POSSIBLE".

Remember, there's a reason why they're called speculative "manias". Fundamentals and reason just don't figure into the decision-making process of the people involved. Greed, fear and euphoria have taken over higher brain functions of recent buyers, and will hold their grip until it becomes obvious to even the most rabid flipper that "20%/year forever" is just not going to happen.

I’ve been following this bubble for 5 years, and I just keep saying: “sooner or later the fundamentals will start to apply again.”

Now is a much worse time to give-in than 5 years ago. Hang in there.

Central Cali,
Over 50% of housing in Visalia (where I live) was bought as “investment.” That is not anecdotal, that is a fact.

Whoa...that's huge! Guess what happens when the investors panic en masse and try to sell? Hehe...I have no sympathy for them.

CentralCali,

There really are lots of places in the country that I don't believe are in the midst of a bubble. I was recently in my hometown, Louisville, KY, and looked at houses there, and I was astounded at what an incredibly nice house I could get there--well built, in a nice neighborhood, good close-to-everything location, etc.

Many coastal people turn up their noses at places like Kentucky though. They often don't even get past the southern accents to realize that they can be nice places to live. I was so happy to see though that more and more immigrants and out-of-staters are moving into that area, realizing that the cost of living is so affordable. Because, truly, the only thing I've really disliked about living in Kentucky was the fact that it used to not be very diverse. But that's changing fast.

I haven't lived there in a long time (now live in So Cal), but--to bring this back to the ideal home topic--we've traveled around and I've lived in every kind of situation from high-population-density cities to small, rural towns. My ideal locale would be within 20-30 minutes of a large city center. I'd want to live in a suburban location with a mature foliage, easy access to jogging/hiking/outdoor activities, warm sunny weather most of the year.

My ideal house would be custom built new, but in a traditional style like Victorian, Craftsman, or Spanish colonial, 4 bedroom, 2.5 baths, a low-maintenance yard with some privacy, in a great school district with very low crime, and a close-knit friendly community where kids actually play outside (hey, I can dream, right?) and people are always out walking, jogging, being friendly, etc.

Square footage doesn't really matter to me so much as smart use of space. I hate seeing space used inefficiently. And I'd prefer a view of trees and foliage over anything else. What I'd love most is to have everything be very high quality, well-built, not slapped up.

I'm not sure what I'd be willing to pay for all that. I'd love to pay $500,000 for it, but I know that won't happen in the Bay Area.

Jamie:

Yes, California is a tad overrated. I was born and raised in Cali, but my first job out of college very reluctantly took me to Chicagoland. When I first arrived, I absolutely hated it - the climate, the people, etc. It was SO DIFFERENT than California. But I've got to say that after a year or so, Chicago and Illinois grew on me. I somehow even adjusted to the snow and ice! I did return to California, but I don't look back on my time in the Midwest with any regret and have very fond memories of Chicagoland despite the obious differences between the 2 places.

I should qualify my last post by saying, because my husband really wants to be close to his family in the Bay Area, I'd probably be willing to pay around $800,000 for our dream house there, maybe in the East Bay somewhere. Other less-inflated places (i.e. not CA), I'd expect to get it for $500K.

>

So true. Okay, I will keep dreaming of 500K in CA. :-) We've got a few years before we want to buy anyway.

laverty, I know just what you mean. I am always a little surprised at how vehemently some CA family and acquaintances believe they can't live anywhere but CA...then I remember that they're the ones who *haven't* lived anywhere else. So their opinion of the rest of the country is mostly formed from old episodes of The Beverly Hillbillies and such.

..never say never.

Perhaps never. Because when the 800K house drops to 500K, Jamie will buy the 1.3M house that drops to 800K. ;)

... as a result, housing bulls will say, "see, median prices are not coming down much!"

Oops, sorry, my quote didn't show up at the beginning of my last post. The first part of my post was replying to Nervous in Oakland's "never say never" comment.

Peter P, I have two kids to put through college someday and a measily writer's income that is not tied to CA's oh-so-robust economy. Hopefully we will excerise some restraint when tempted by that McMansion. :-) (I also have a strong aversion to debt of any kind!)

I lived in So Cal as a kid and worked there for awhile when I graduated college, and definintely think the L.A. area is over-rated. Northern Ca is more to my taste, but since this RE has taken off, it seems like a lot of the So Cal phoniness is migrating up here. Now that everyone has the in-home ATM they seem to want to look like the beautiful people down south and have all the stuff too. I'm not trying to sound bitter but I left So Cal to get away from that and I'm a bit annoyed that my area is getting infected with the gotta-have germ.

Anyway, my husband and I have toyed with the idea of moving out of state, but job and family will likely keep us here for awhile. My parents and in-laws have mentioned moving in the past and if they do, we may follow. We'll see.

In 1999 was thinking of buying the house which we were looking (some collegues bought ~400k for 2500sqft with about 5000 sqft lot). but the company stock was doubling so often that I didn't feel pulling out the stock money. In 2000 when the stock crashed I was shocked. In 2001 and 2002 I thought the prices are too high and will correct itself soon usually after that stock market crash I expected the house prices to go down but on the contrary they were giong steep high. With the current house prices I am price out (for 20% down with 30year fixed).

I still believe that the prices will be adjusted and expecting it to be atleast year 2000 price in 2007 no choice to but to wait and see.

BTW the 1999 400k house is now 1mil + and still going up.

loveuser: Actually, that's been the typical (and I realize very general) economic pattern for the past few decades. Booming stock market = Stagnant real estate = early and mid 1990s, 1980-87. Stagnant stock market = Booming real estate = most, but particularly the late 1970s, late 1980s, 2000 to ??? People get discouraged in one sector and put all their eggs in the other. Lather. Rinse. Repeat.

Actually a slight correction to my above post. The early 1980s was a time when, quite frankly, both stocks and real estate sucked thanks to high inflation, high interest rates and high unemployment and just an otherwise crappy economy. But things turned around about '84 or so.

Central Cali,
Over 50% of housing in Visalia (where I live) was bought as “investment.” That is not anecdotal, that is a fact.

Carefull where you buy. When things go bad, that investment may become the next slum...

Observer, your observations cannot be more wrong. Which housing bull did we slaughter? We love reasonable housing bulls. We are probably out of topics mostly because our theory is becoming fact and truth will soon speak for itself.

Sacto-
ow that everyone has the in-home ATM they seem to want to look like the beautiful people down south and have all the stuff too. I’m not trying to sound bitter but I left So Cal to get away from that and I’m a bit annoyed that my area is getting infected with the gotta-have germ.

Yeah, reminds me of all the name-dropping/"net worth" swagger during the dot-bomb.
Back then, my crass-o-meter went into the red zone, and it's tipping that way again during this RE gloat-fest. Nothing changes, I suppose. As an escape, we've recently started reading one of those "simplicity" books (suppose it's popular now) to get a sounder perspective on life and possesions.

I used to feel pressured around housing speculator friends. In the past few weeks or so, all such stress was suddenly gone. It appears as if I can sense the end drawing near. Time is up. Game is over.

My new stress is how not to miss out on the bust. Positioning for this crash has been quite difficult.

After reading some recent postings, this blog feels much like a support group for housing bears dying to own a house at a reasonable price, who are feeling down and depressed because the market is going crazy.

I feel sorry for the crazy people. Or maybe I'm crazy ;)

To Observer:

Oh, those poor housing bulls! Let's all feel so sorry for them. There are plenty of places on the Net where housing bulls get together, pat each other's backs and congratulate each other on their brilliant investment. (I.e., Craiglsist housing forum to name but one) The housing bull market has gone on for so long that people are just so sick and tired of hearing about it ad nauseum not just from bulls that post here, but the media. Even yesterday's Bay Area DataQuick report covered by the Chronicle, despite the ever so slight dip, still dripped of unrelenting optimism.

The premise of this site is for the housing bear audience. Why do we have to believe what the bulls do? Why aren't we allowed to post holes into the argument of the occasional bull that comes here? And why do you CARE?

I just checked, and I have no evidence of carnage or slaughter upon my body.

Jack, have you checked whether you still have your liver?

Novel concept:-
Buy a house now, to be paid for with shorts on TOLL +FNM.

Oops,
Above post was not investment advice.

Thinking about that one.
Maybe you could consider this a straddle.

Maybe you could consider this a straddle.

What "straddle" are you talking about? The option strategy? Should we use a "synthetic straddle" on TOL and FNM (aka put ratio backspread) since we are betting mostly the downside?

Buying property, and shorts would be contrary bets.
Actually, probably better described as hedge.

According to my observations, Jack is not a housing bull. He appears to quite pessimistic about the future of the housing market.

Who is the housing bull you are talking about?

Observer,

According to my observations, Jack is not a housing bull. He appears to quite pessimistic about the future of the housing market.

Actually I think most RE bears would be bulls if pricing was more realistic.
Being a bull or bear, doesn't make you right or wrong as it just reflects the value you perceive. Prudent investors would try to buy below value, and ideally sell at a price higher than value.

"Actually I think most RE bears would be bulls if pricing was more realistic."

Exactly! This has been more than simply a bull market. 20% growth year after year is a bull market on sterrhoids.

According to my observations, Jack is not a housing bull. He appears to quite pessimistic about the future of the housing market.

Welcome back, Fake P!

I wonder why Fake P has remained an observer for so long. We need you!

Do you really know that this is Fake P?

Unless someone took over his computer. :)

Mr. Right

Where do you stand on the market? Sometimes you seem bullish and then others you seem to take a bearish view. Is your view primarily dependant on the location? Just curious.

Mr Right,
This is the only factor of todays housing market that concerns me.

All I can say is "Like lambs to the slaughter".