The real estate market was in the doldrums in the early 1990s because of the excessive inventory of homes from the previous bubble. The Resolution Trust slowly released those properties into the market, mitigating the severity of the decline, but prolonging the agony.

Today we also have an excessive inventory of homes from the recent bubble. They are being steadily released into the market, keeping prices down. But the process will not take as long this time.

Japan is not the model. The problems of Japan are very different. They have no population growth, shifting to actual population decline. So housing is in a permanent oversupply. When supply exceeds demand, prices fall. Even with low interest rates.

We do have fiscal mess in our government finance. It is a rapidly growing problem now, and will develop into a real burden by the 2020s when the retirees are more numerous.

Along with boomer retirement will come a labor shortage, leading to real wage increases.
The bad news is that taxes will go up faster than real wages.

Sold $500k

that's a strange investment or transaction. Sold in January for 465k and 2 months later "flipped" for 500k
Subtract 6% transaction cost, cost of 2 months insurance and property tax, and the "flipper" made $1000?

Buyer and seller appear non-related and sale went through MLS.

What??

E-man says

I couldn’t believe I heard this from you :o). I don’t want to see you go down the wrong path or have a misunderstanding about Uncle Ho and his administration. Do you know what Uncle Ho and his administration did with the land and properties they took from the landlords after they shot them? Why do you think VietNam is now reinfested with the same age-old corrupting element……? Care to explain?

ZippyDDoodah says

Social Security is clearly a socialist institution whereby this year’s contributions are used to pay this years expenses. It’s a form of insurance

Why do you liberal fascists insist that Social security and medicare be MANDATORY?

It’s because you think you know what’s best for everyone else.

I am here at 3 am because I can't sleep. A local hospice is caring for my father. The problem lies in the fact that they are convincing my mother that SHE needs hospice, too! Her doctor would not sign the papers as he does not agree that she needs hospice. They promised to take my mother papers to sign to end the service.

Then yesterday, I popped in with dinner, and there were two people putting pressure on my mother to stay on the service. (This is two weeks after she asked to be removed). Now she says she just wants to die. She is a vital 80 year old with some heart failure, but otherwise healthy and her mind is great.

What can I do to stop them from harrassing my mother, just when she's feeling better about life?!! This is truly scary. They are manipulating her and agreeing that she "shouldn't live to be a burden to her children". Please help.

Thank you you for listening and any advice you can give.

Iwog...still smokin that crack I see...

@ azrob,

You made a compelling case. I don't disagree, but I think we're in much better shape comparing to many Europe countries and even China. Their RE bubbles are much bigger than us. With that said, I believe the dollar should gain its value against the Euro.

When it comes to RE investing, I believe we have different philosophy. Iwog and I acquired properties at about 50 to 65% below the peak value (2006), and all of these properties do cashflow. If rent were to drop 30-35% from here, we still don't have a negative cashflow issue. I would say that's a pretty nice cushion. Also, the properties we acquired tend to be in the lower-tier of SF Bay Area. As demonstrated on the C-S graph below, the lower-tier has corrected more significant than the mid- and high-tiers, and it tends to outperform during good years. Personally, I don't think we have much room to fall on the lower-tier, some room on the mid-tier, and quite a bit of room on the high-tier. Of course I could be dead wrong, but that's the bet that I am willing to take.

I am not smart enough to know when we'll hit bottom in the RE market. Therefore, my strategy is to keep on acquiring 2 to 3 properties each year as long as it would have positive cashflow.




Of course I know banks are holding back on its "shadow inventory" as shown on the chart below. Look at how out of whack the actual REO's compared to 90+ day late loans and the foreclosure filings.



I know this RE bubble is much bigger than the S & L crisis in the late 80's and early 90's, but I let the numbers guide me. If I can acquire any property in San Jose or Milpitas having a GRM of 9 after rehabbed or greater, I buy. I don't mind the RE market goes down some or sideway for the next 5 years, but I would likely be a happy man looking back in 10 to 15 years from today and say "God, I am so glad I bought RE back then." So wish me luck.

Happy Investing!

@ NorthBeachRenter,

Congratulations on your outstanding achievement in such a short time. Wouldn't you say America is the LAND OF OPPORTUNITY?

0%. We don't spend any of our income on our mortgage. It is being paid by our tenants.

Just like NorthBeachRenter, I came to the U.S. with family in 1989 at the age of 15. I worked 7 days a week since 9/91 to 4/02, and again 5/08 to 2/10. I worked 5 days a week between 05/02 and 04/08. All the hard work has finally paid off. I'm taking this year off to be a stay-at-home dad to take care of an 8 week old newborn baby girl. Yes, she is my diamond. Wife is going back to work this June.

I LOVE THIS COUNTRY.

and I also refuse to believe that people are suddenly too poor to afford basic housing as the population continues to rise.

There are other ways to make ends meet, and people will find them.

Awesome. I hope prices become affordable in palo alto and menlo park going forward.

AdHominem says

elliemae says

and the program saves money. It’s just rampant with fraud.

isn’t that an a contradictory statement?

Where do you start ...
Media cheerleaders like the clowns from the San Jose Merc News, pin head economists from Harvard University's Joint Center for Housing Studies, the corrupt GSEs, local/national realtors association, and of course government on many levels itself. The list goes on! All of them denied there was a housing bubble. So lets blame the banks, and make them the scapegoats.

>> I disagree. The shaded yellow area is saying “Remaining Bubble Still to Deflate”. If this doesn’t mean home prices are over-valued, what does it mean?

E-man,

The annotations on the graph are not attributable to the Case-Shiller index. Nor is the graph itself an un-adulterated representation of Case-Shiller data. Specifically, someone (see link further up) has divided the price time series with an inflation time series to make a specific point.

So, I repeat, Case-Shiller (the index itself) makes no representation of whether houses are undervalued or not.

You can agree or disagree with the viewpoint behind the annotations, which is that house prices in the long term must reverse to the mean

On top of that, these are 10-city and 20-city composite graphs, nor SF or any other metro area. To argue about specific metro areas use specific
curves

Personally I think the bottom will occur well into the yellow band. Exactly where will depend on how successful the Fed is in creating (housing/consumer) inflation. In fact, one could even argue that the higher the CPI inflation relative to housing inflation, the lower the curve has to go! One always must be careful when contemplating inflation-adjusted curves and the future. I hope this clears things up.

And down south...20% vacant! Are we shooting for 25% by year end.

Silicon Valley office vacancies to remain high this year
Posted: 01/17/2010 04:00:00 PM PST

Nearly one-fifth of Silicon Valley's commercial office buildings stood empty at the end of 2009 — the worst vacancy rate in at least 15 years — and that figure is only expected to increase in 2010.

Vacancies in research and development space — the most plentiful workplaces in the valley — are the worst in four years. That's 44 million square feet of office and research space — about 83 San Jose City Halls — in need of tenants, according to data from brokerage NAI/BT Commercial.

pkennedy says

What facts do you actually have of BOA paying back the government, other than conspiracy theories, and rants?

Do you have any securities credentials? Certified accountant? Executive at a high level in any financial institution?

You are not really in house debt and you don't have a massive property tax bill to pay, so this thread is not directing to you. Why get defensive? Nobody's talking about you.

Payoff2011 says

My property tax and insurance bill isn’t HUGE. Mortgage payment isn’t all that big either and WILL BE PAID OFF NEXT YEAR. Sorry dude. You can’t blame me for the bubble. I’m not underwater. It’s been many years since we bought our current house, and we didn’t buy more than we can afford. Property taxes are self escrowed. The funds actually earn me a hundred or two each year in a 4% account. Paying that bill when it comes isn’t a hardship.

Sorry, your point was?

I've never lowered the rent of an existing tenant, but I have lowered my asking rent based on a number of factors including how much I liked the applicant and how long I've had the unit listed.

I don't like keeping a vacancy over a month. Therefore I usually drop the rent by $50 a week until I get some serious interest.

AdHominem says

Kevin says

I can do pharmaceutical research in my garage.

Yeah, and then you wake up. I read about guys who made the latest blockbuster drug in their garage all the time. But please do continue to prove you don’t live in reality.

AdHominem says

Kevin says

Private businesses never take up important research efforts like space travel

Obviously you haven’t heard of Virgin Galactic. Kevin you are clearly not an authority on reality. Please do allow yourself to learn something today.

AdHominem says

That is an interesting and ambiguous concept.

4X says

Someone on these threads mentioned that we would all be better off if we were not using our health insurance for routine checkups and likened health insurance to car insurance.

I have a great way to fund it - get rid of Medicare Part D. Why should we subsidize medicine for the richest segment in America, who never contributed anything towards the new increased costs?

I hear that the healthcare reform bill will cause me to grow a second penis.

Kevin says

How are your attempts at exchanging silver for goods and services going?

AdHominem says

Ask: can’t WE THE PEOPLE do something rather than relying on Uncle Sam and Big Brother to take care of us?

It’s kind of funny to read someone from Austin comment but I could be wrong. Maybe this person has actual first-hand knowledge. I understand that the prices must shock someone from Texas. (Yes, I had to spend time there too, but not as a residence.)

-Peter

rileybryan says

alright, so I’ve read through the posts, and I’m pretty sure that not one of us fully understands whats going on in the 2500 page bill.

From what I can find, it turns out this bill is equivalent social security II. The young are on the hook for the old,

and its going to cost a lot more than they say.

Its no secret that denying things like pre-existing conditions are BS. But are we really on the hook to pay the bill for some jackass who smokes rat poison cut meth?

I think that if we are on the hook to pay for these morons, we might care a little more about fixing our society to the point that these people might want to do something fun & less damaging… and I’m not talking about alcohol

What is unearned income? If someone saves, invests smartly and makes money it is “unearned”. I can only hope to make huge amounts of unearned income. Also, there will be a tax in rental income

Actually I was wrong. They're raising the medicare tax on everyone making more than $200k, but this time medicare is going to tax unearned income over the threshold (it doesn't apply to any unearned income now).

which will drive up the price of rents(yes landlords will pass the tax onto tenets)

LOL. They can try. LLs aren't shy about taking their victims' surpluses, so we'll see how that goes.

Thanks for your contribution, Mr Galt. I'm sure you and the other 523,713 libertarians/Randroids in this country don't like this policy direction one little bit.

Good thing you're totally irrelevant right now.

Patrick - you need to post this on your housing crash forum in all fairness since you are biased toward ObamaCare:

I don't think I've ever found something of the WSJ Opinion page that wasn't a total passel of lies and distortions.

http://www.sourcewatch.org/index.php?title=Galen_Institute

Funding

According to Galen's 2005 report to the Internal Revenue Service (IRS form 990), the organization had $695,022 in income and $607,615 in expenses that year. Turner's compensation for an estimated 60 hours per week of work at Galen was $180,000. [2]

tatupu70 says

Just to set the record straight–Social Security is not in the red, Medicare/Medicaid is not in the red. The War on Poverty does not generate revenue so not sure how you can measure profitability.

Patrick,

This outline seems reasonable, however...

The reason why health care is expensive, is because of medicare.

Anytime govt. gets involved with money, prices go up.

How much did "healthcare" cost BEFORE medicare?

Also, how much did "education" cost BEFORE govt. backed student loans?

The costs where much less.

I don't care about insurance company profit. I'm not a shareholder.

However, insurance companies have a limited monopoly, because they can only write insurance in their state/region. If companies can write policies anywhere, there would be more competition.

Still, that wouldn't lower the costs enough.

We must put a cop in each emergency room, to police non-citizens, so they don't take from the public systems (medicare)

If we quit subsidizing school loans, Dr's. won't have to pay $250,000 for medical school.

I have worked on SS, and medicare billing systems at hospitals. The hospitals charge the govt. basically whatever
the hospital can get away with. The govt. doesn't care, cause it's not their money. It's the tax payers money.

Larry