patrick.net

I'm just glad that there are forums like this one that tell people about the scams Gabby mentioned. I'd assume if you are alert and read carefully before you sign anything you'd be ok, but some people are so slick you can't be too careful.

I hope those who are guilty of morgage/appraisal fraud get slapped down hard! That kind of greed hurts everyone.

I’d assume if you are alert and read carefully before you sign anything you’d be ok, but some people are so slick you can’t be too careful.

Very true. But generally, if something looks like cheese and smells like cheese, it is probably a mouse trap.

(BTW, they are opening a new mouse trap in Hong Kong, China this year.) :mrgreen:

BTW, they are opening a new mouse trap in Hong Kong, China this year.

To clarify, it is a people trap operated by mouse.

Peter, do you think that most appraisers (at the working stiff level anyway) really have much say in the process? Remember the definition of “Unemployed Real Estate Appraiser": A person who refuses to lie for a fee.

Bottom line is, if you don't appraise the house for the number the buyer/seller/realtors/brokers want, you may not get any more work. The same thing seems to work for lenders --don't qualify people for loans they have no way of repaying, then they go elsewhere.

IMHO, the best way to prevent this type of fraud is to force lenders to hold a large chunk of the NAAVLPs they originate on their books. Then you'll start seeing those "quaint" lending standards reappear REAL fast.

Peter, do you think that most appraisers (at the working stiff level anyway) really have much say in the process? Remember the definition of “Unemployed Real Estate Appraiser”: A person who refuses to lie for a fee.

Well I did not say that it is necessarily their fraud. ;)

I think the mortgage industry will be slapped very hard.

People who are buying today are rational. So many of you believe that buyers today cannot afford what they are buying. So, please explain to me if they cannot afford to buy, how and why are they buying? What governing body dictates an affordable home to one individual or another?

It’s so obvious to me that anybody buying in this market, so long as they didn’t get in a bidding war, are going to be in the money next year and the following.

(throwing up hands) Have you been under a rock??? I can't believe that you have NOT been reading the same stuff we are reading! Sheesh!! UN-fr*&(n - believable. :|

People who are buying today are rational.

MP, why do you have so much faith in the market? I refuse to believe that the market is always efficient. That would be that I cannot win speculating in the market. I refuse to believe in that.

So many of you believe that buyers today cannot afford what they are buying. So, please explain to me if they cannot afford to buy, how and why are they buying? What governing body dictates an affordable home to one individual or another?

We have discussed that already and I am bored talking about it. I do not really care anymore. I just want to focus on profiting from market actions.

I’m sure everybody will start attacking me and calling me a fool etc. But, that’s exactly the way i like it.

Then you must hate me because I have counted you as my buddy.

MP,

I own out-of-state (purchased 6 years ago...1999) and rent locally. I started buying in the late 70's. At last count, I've owned 4 pieces of property and I look forward to purchasing at least 1 or 2 more before I retire...hopefully in the next 2 or 3 years. My main objective is to retire comfortably with the proceeds of my property, 401(K), IRA, whatever Uncle Sam gives me from SS, and (as a divorce settlement after 23 years of marriage) the agree upon portion of my ex-husband's pension. As a single woman (children are 27 and 21) I don't think I am doing poorly at all. I do my homework and study all angles before I jump into anything.

The property I own in VA is in the black...over the years of regular rent increases and 1 refinance, I realize $300/month profit, so it pays for itself. If I wanted to, I could take an equity loan to buy an additional piece and still not go in my pocket. But I don't care to do that until the Jaws music stops playing.

I'm doing fine, thanks. 8-)

BayQT~

It’s my opinion that if one could make $65-75K/month in the Bay Area, that’s enough for a great lifestyle.

Of course... that would be over 1M per year pre-tax though.

Oops, not $65-75k/month.. but a year! Or, roughly $1,500/month is spending money after savings sounds like a good amount of money to me.

Well, depending on what you like to eat though...

Work to live, live to eat!

I want to clear something up...that I am not retiring in 2-3 years, but would like to buy in 2-3 years. I've already begun paying extra towards my principal which will shorten the life of the loan, as well as saves me money by paying less interest on the balance owed.

BayQT~

50% of people’s income isn’t that big of a deal. I do believe i can live on literally 1/3rd the remaining half of my income and be very happy.

But 50% of pre-tax income for a family making less than 100K a year can be a problem...

According to some agents that I talked to, this is not uncommon in the silly valley...

Well MarinaPrime, forgot to thank you for the Avocado bacon pasta recipe. I will surely try it out.

MP,

A multi-unit building would be a wise purchase...but not now! Do it in a few years. (I've thought of that, as well.)

And thank you for the kudos...it was not overlooked. But it would be a good idea to not underestimate the situations of the individuals on this blog. Because many are bears does not mean that they are not happy with what they are doing now. I think SactoQT said something to this affect, too. I am by no means an expert in RE, stocks, etc. I just make very, very careful moves....because I want to enjoy my life and remain as stress-free as possible.

And yes, I am under a rock… as i focus on my career, my friends, and living life to the fullest, not worry about a notion of a RE bubble.

Nervous,

I believe that MP is in the 20-30's age bracket, and admits he is "under a rock". I'm coming to the conclusion that perhaps he can't help himself.

BayQT~

@MP: What can we say? You're just plain dead wrong about the demographics of the Bay Area, and of mortgagees.

I believe you are exactly what you say you are. You remind me of several people I have worked with in the last five years. You're a smart kid, and you know a lot of things, but you have a very very false understanding of the population outside of your condo complex, or your walk to work.

Live the dream while you can, dream the life while you can. But don't pretend that your reality can be extrapolated out into real life.

a favorite quote from the days of USENET...

"I've found it pays to be very, very, sure I'm correct before getting condescending."

Apply to affected areas.

Nervous in Oakland:

You nailed it with your post! I've added a few observations of my own

if they cannot afford to buy, how and why are they buying

1) Fear "buy now--before it's too late" Peer pressure from their circle too.
2) Weak lending standards. Let's see--IO/ARM/Neg-am. And this isn't a small fraction of today's mortgages either!
3) Low interest rates--Interest rates designed for flippers, plus the above. Think people will get stung? I do.
4) Stupidity --they do little or no research, and ignore obvious warning signs. What they consider a "great investment" could become a huge liability? Impossible, you say!
5) etc, etc, etc. Their little social club looks down on renting, so they miss out on a great savings opportunity during a rental glut.

...or, if you prefer, from Bend it Like Beckham (I only saw the previews, I swear!):

Shtop Embarasshin' yo'shelf!

MP, about the time you develop a larger awareness of your surroundings, you might pick up on exactly how banal your self-impressedness is to other (putative) adults.

@Jack: sorry, that was not directed at you at all. It was he-who-shall-not-be-named.

"...I still have a lot of work to do before i can balance some of your doomsday thoughts out, but i think over time, I will be able to make a difference.

Well, MP--thanks for the offer; we wouldn't know what to do without you. ;)
Next time I need to gloat publicly over my Primeâ„¢ location, I'll choose you as my spokesman.

It will be interesting to see if MP will ever show his face again here when prices do correct.

If things do drop, even in Primeâ„¢ locations, I doubt the cheerleaders will ever own up. If they survive the carnage, they'll downplay their losses, just like the dot-bomb. I think it's what keeps the bubble cycle going: cheerleading->denial, repeat. That is, until they're all bankrupt.

MP is most certainly a housing bull (horns ‘n all).

I don't think MP is a housing bull. I think he thinks he is. After all he is not looking to buy more houses right now is he? How do you think he will react IF (and I am not saying they will) Marina prices fall.

If , when, housing falls, then we will see who the real bulls are because they will buy buy buy!

(Not investment or reality advice)

quesera,

putative Great word. I had to look that one up to see what kind of adult I was. :-)

Whew! MP *does* make one tired with all the nonsensical talk. I feel like we can relax now. And no (to Nervous), I do not advocate that we pity him. *He* had become very obvious and wasn't worth any more energy. But very hard to ignore when you know you can prove your point to/with him. He's enjoying his "tapas" now with his gf.

Is it time for another topic yet? (picture a Garfield smiley face)

BayQT~

MP,
Tell them you want to raise rents to $3000 / month.

They will obviously complain, but in the process they will try to negotiate and will probably tell you their price point.......

How much increase do you think is enough so that they won’t want to move? I like them as tenants, but i want to maximize my assets.

What do you guys think?

Well, MP, as I have said earlier, it is very important to have good tenants even if it means slightly lower rent.

I would keep the rent, but negotiate to have them chip in for certain value-adding home improvement (perhaps some new kitchen parts, new bath fixtures, etc.). They may have something in mind anyway and it can be a win-win. When they become more attached to the place, they will likely to be good long-term tenants.

To us renters,
When your landlord tries to raise the rents, tell them you have been looking and have found cheaper rents and have been offered free rental periods as a teaser.

They may call your bluff, but hey, doesn't hurt trying because they might even drop the rent.

MP,

Antitroll.. i’d call my tenant’s bluff.. or perhaps instead of raising it by $100.. just by $50 to make them feel that got something.. and then have them sign a one year contract.

MarinaPrime

Problem is , what if they aren't bluffing. You know, petrol is going up, costs more to ... (insert winge here).

Maybe they don't want to live prime anymore.

I agree having better tenants for slightly less rent is better than nightmare tenants at any rent. Call me opportunistic, i guess.

Nightmare tenants are more than nightmares... remember Pacific Heights...

i’d call my tenant’s bluff.. or perhaps instead of raising it by $100.. just by $50 to make them feel that got something.. and then have them sign a one year contract.

Well, a good tenants usually will not resort to bluffing if the raise is justified. On the other hand, do not ever let your tenants know that you are going to "raise just enough so that they will not move". It is understood but it is not something to be advertised.

Jack, are you still up for the party?

Question?

When people sell RE to sit on the side lines, are people renting prime or finding economical rents to save money for the shakeout?

General question for people.

My deadline for selling the place is June, 2008.. when i get sell without paying taxes up to 250K. It’s kinda tricky for me.. cuz if i lock them in long.. .my tax free window may pass.

How about a call option for them to buy in Feb 2008? If the market drops they can walk so they will be fine. You do not think the market is going to move too much anyway so it does not hurt you. Win-win?

Yes, of course.

How about other? Party? How about September? (Not a crash party. Not a party crash.)

Forgot...

(NOT INVESTMENT ADVICE)

That last post didnt make any sense to me.( How about other? Party?)

If you are just saying how about Sept rather than Oct, that would be fine for me.

We can definitely have party in Sep. We do not need to wait for it to crash, do we? We can also have multiple get togethers too! (to accommodate people from different areas) :)

Well, for a call option to work.. we need to agree upon a strike price. I doubt they will agree to a price of $875-$925,000.. which is where i think the condo will go to in the next 2.5 years from around $775-$825K now… i.e. 5%-7% increase per year.

The strike price can also be indexed to some measures (e.g. 110% of SF median price). You can price the options into the rent as well. Of course, it takes a lot of talking... but it is very possible to arrive at something that both parties want.

(Your tenants are probably intelligent people and they are probably aware of the tax window anyway.)

Yes, and different choices of company also.

Let's see who is in the Bay Area "Chapter"...

MarinaPrime
Jack
Peter P
...

:-D

Of course we will have choices of company... don't worry, Jack. ;)

What this Jack vs. MP debate really comes down to is whether there will ever be a judgment day.

In MP's world, there never will be, so why save or worry? Everybody makes or will soon make $180-360k. Although every statistic I've seen (and every issue of the Economist) says that wages have stagnated due to cheap Chinese/Indian labor aribtrage, somehow this is all nay-saying by negative people who don't think with their heart. In MP's world, then it makes sense to stop thinking and love the bubble! Blow money on Porsches, $1M homes and so on because the party will never end, it will just get better. Want proof? Well if people couldn't afford the houses, they wouldn't buy them. Hey, I know ___ rich people. Got to go now, time to have my $500 chef's kitchen dinner. Think positive!

In Jack's (and probably my world) there is an end to the party and we want people to know about it. Our economy has been propped up by cheap money, and 2% of our 3.4% GDP is estimated to be RE-related. Oil prices are starting to cast gloom over everyone save hybrid car salesmen, and it's doubtful they'll come down much given worldwide demand. Greenspan is clearly trying to slow down the party with rate hikes, but (again, read the Economist) China's enormous dollar apetite means that China increasingly controls financial markets. All along our country has been jettisoning every long term capability (engineering, manufacturing, research, education) it can for short term profits it can make by shipping and Wal-Mart'ing wealth other nations create. We basically count on the fact that the rest of the world doesn't want us piggies to get sick because they rely on us to eat their slop. Not exactly a position of strength.

Given the latter, someone explain to me where all these sustainable $180-360k Si Valley jobs are going to come from. I'll give you biotech - but it's as fragile as tech. Explain to me how, EVEN IF rates stay indefinitely low, how even $180k salaried individuals are going to buy houses 5 years from now when 10% price growth doubles them again. How many people are saving up for that day? I just don't see it, and maybe, as Emporer Palpatine said, this is the price I pay for my lack of vision. Course he shortly went down the tubes.