patrick.net

Is this ScottC the same as the previous ScottC? I like this one. :)

I never hated realtors anyway. But I still like the idea of Open MLS.

Free market, banzai!

I LOVE TX, and the upper South, too. One warning, though.

There was this biggot over at Ben's site that moved to TX from NYC. She thought it was ok to complain about how ignorant Texans are. Then she said "I refuse to adopt that stupid way of talking". And of course, "The way those people think down there........."

She was even shocked that "My husband was actually called a yankee, three times!". Texans, and Southerners in general, are some of the kindest and most polite people on earth. If the man was called a yankee, you can bet he deserved it. DO NOT move to the South if you are bringing biggoted attitudes with you. You and everyone who has to put up with you will not be happy about it.

She was fearful that she might lose her ass on the house she bought there. A brave reader responded that he hoped that she got what she deserved for being such a biggot. I do too.

--Deo Vindice

DO NOT move to the South if you are bringing biggoted attitudes with you. You and everyone who has to put up with you will not be happy about it.

Small correction:
I think you meant to say, "do not move to the South if you don't like EXPERIENCING bigoted attitudes directed AT YOU."

You weren't trying to be ironic, now, were you? ;-)

Some hard data:

GSP (gross state product portion of GDP national income accounting):

Growth 2003-2004:
CA = 7.8%
TX = 7.6%

Chained-Dollar Growth 2003-2004 (a more accurate infl adj measure):
CA = 5.6%
TX = 4.6%

only NV and AZ were higher than CA. Over the past 10 years, CA is *by far* the most productive state in terms of economic growth.

Absolute 2003-2004:
CA = $1,550,753mm
TX = $ 884,136mm

Contribution to US GDP:
CA = 13.3%
TX = 7.6%

CA must be doing something right, despite the "anti growth" attitude. I think CA can do *much* better, but the data doesn't support the pronouncements of demise.

--source, B.E.A., Regional Economic Accounts

HARM:
"I think you meant to say, “do not move to the South if you don’t like EXPERIENCING bigoted attitudes directed AT YOU.”

That's what I'm talking about, HARM. Apparently, you have done a statistically valid survey? Or was that just a stereotype? If you feel that way, please stay put where you are.

--Deo Vindice

That’s what I’m talking about, HARM. Apparently, you have done a statistically valid survey? Or was that just a stereotype? If you feel that way, please stay put where you are.

Gee, Mr. Confederacy, I haven't done any surveys lately. Maybe someone in the media could do one. They could start by interviewing all those guys in the white sheets that, um... you know, like to hang out in the woods, burn crosses 'n stuff.

Other than that, I KKKan't think of a single reason why anyone might have a bad impression of the deep South.

Cheers.

Housing Bubble Prediction: People in Red states are going to be fed up with the arrogant, communist, ignorant blue staters that move there for cheap housing prices. Especially the baby boomers.

HARM:

The largest Klan rally ever held was in Illinois. Both Massachusetts and Michigan had huge Klan organizations throughout the 1930s.

Remember the Black Man beaten to death in Brighton Beach? That was NY.

Remember Willie Horton? Boston.

Supreme court precedent on the right for Neo Nazis to March? Skokie Illinois.

How about those Neo Nazis in Idaho, gotta love them.

Where was that recent racially motivated prison riot between Blacks and Mexicans? LA. What a segregated shithole that town is.

--Deo

R Patrick:

"I still cant understand what heppened, the more I read the more I shake my head. It’s sad really I guess."

So we were counseling some friends of ours to reconsider their plans to ditch the Bay Area in search of affordable housing in the PNW. They have a couple of kids, mom stays home, and dad works hard, but is only making in the range of those recent college grads. Mom reads finance books that tell her buy a home, buy stocks, or you are just throwing your money away. They are OBSESSED with buying a house, no matter what. If they move, they will burn through their savings, and dad has to find a job that will unfortunately pay less.

They are good people, but not college educated. They really just want the American dream. They are outmatched by the financial press, the RealWhores and their foolish peers. Their parents did well by buying a house, so they see it as proof that in the long run, they can't lose.

They are the very portrait of the squeezed middle class caught up in this mania. The scary thing is, it really is different this time. I mean, it really is the same this time. The world moves in long cycles, yet people have short memories. Empires rise, empires fall.

Right now, China and India are rising, and our standard of living is falling. The US industrial states are struggling with impossible legacy costs and an electorate that wants another "New Deal". Mean while, the South is rising, not from a new paradigm, but because it has Ricardian advantages based on low costs, low taxes, and low government service. Believe me, it is different than for our parents. The 21st century is not America's century, and housing prices will decline for a very long time reflecting lower wages and diminished prospects. The North East and most of the Great Lake states will fail to adapt, judging by history. The South is already adapted because it was poor for more than a century. It will benefit and gain political power domestically. But it is a zero sum game in a declining empire. I mean, unless it's different this time.

--Deo

You will be lonely in your kennel after we confiscate your assets to pay your debts.

The Xers and Yers won't have time to persecute the defenseless Boomers. We'll be more than occupied fighting the invading Chinese army in our own streets. The Boomers will be exterminated by the Reds just for being a burden. The Xers and Yers will fight and die in the streets, or spend their short lives in forced labor camps throughout the former USA. And that's looking on the bright side. Sigh.

Indiana house with wrong value ($400 Million!) causes budget shortfall and other problems:

http://www.cbsnews.com/stories/2006/02/11/ap/strange/mainD8FMLVLO0.shtml

Unalloyed:

Take heart. Empires don't collapse, they decline. Just like the Romans. The Chinese won't invade us for at least 100-200 years. We're just going to get poorer and poorer throughout our lifetimes as Asia rises. And of course our political landscape will be completely different from the last 150 years. It's a cycle (Kondratieff x 3 = 1 super cycle). Which is bad for US house prices!

They will tell you this if you take the intro to political economy class at any reputable university. Just don't bring it up on this board. People get touchy when you don't fall in line with the "America is different, and so is our history" argument. America only goes up!

--Deo

I just have some weird observations to share.

I have been tracking West Valley communities like Los Altos, Los Gatos, Saratoga, etc. I have noticed that the pending (continue to show) notice on website seems to on much longer than before.

When I bought a home 11 years ago, the whole process took around 20 days or so. Grant it, I was buying at almost 1/3 of the prevailing price, but the time taken to process a transaction should be fairly independent of the transaction price, plus we are have been used to the million-dollar price tag for almost 5 years now.

There are some properties that fall out of pending stage and come back on market. However, most of the pending notice on the website are there for at least 2 months! Is that normal? Why does it take so long for properties to go through a transaction??

Some other weird observation. Some properties come on MLS with a pending notice, I'm almost like, why do you need to show this property if it is already pending? Could it be some kind of MLS trick to show PAST TRANSACTIONS so that it looks like the market is back to red-hot normal stage?

Here is my conspiracy theory. If you look at the 120 or so inventory, only 3-4 pending will look extremely ugly, giving buyer a sure sign of a slowing market. However, if you let these pending signs just sit, even if they are long done pending, when the next batch of new inventory come in, the overall pending ratio will look much better. Better still, how about resurrecting some PAST transactions so the inventory is full of pending signs, looking as if the market is well and alive gain?

I am highly suspicious of the MLS playing some kind of a mind game. Because I have spotted 4-5 properties that were pending for almost 5 months now! How can a property be pending for that long! If I am the seller, I will sure run out of patience. It is also a bit too strange that there will be so many properties falling in and out and into the escrow again. That is just abnormal.

What I highly suspect is that MLS is intentionally letting transacted properties from last year, or a few months ago sit in the database, creating the kind of illusion that the current price still has takers. It is really not illegal to let the pending properties SIT, this is called window dressing.

dt,

I am in Los Gatos too, just that I am not tracking condos, but SFHs. Do you happen to see the same thing that I saw? Many houses pending for an extended period of time, 3-5 months pending, like they are stuck in the pending phase.

The SFH inventory in the West Valley hasn't grown that much, to be fair, most of them are just sitting there at an inflated pricing. Some of these houses that were pulled in winter came back to the market at another 10% spike in asking price. Good luck!

"...like they are stuck in the pending phase."
LOL SFH purgatory. Oh! The horrors of a market shift.
I always hesitate with conspiracy theories...but then again, history shows people do crazy shit when their livelihoods (you know, H2's & fat plasma's, etc.) are at stake.

"...IT’S SO REDICULOUS. People don’t think sometimes. They’re just doing what everyone else does, which is stupid. "

Spoken like someone who hasn't been in the bay area very long! Crazy, isn't it???

"...I am in a Real Estate Market. I work for mortgage company."

So what's the word? Business picking up after the holiday showdown?
Regular updates would be stellar!

LOL showdown = sLowdown.
(if there WERE a holiday showdown, my $$$'s on Christmas)

I honestly don't think letting past transactions continue to show in the database is an totally off the wall thing. After all, real estate is mostly about buyer psychology. There is no fixed formula about how much a house should be worth, that's why "staging" is so important in a home sale, and a good "staging show" costs around 4000-8000 dollars! They have an interior designer come into your house, do some low-cost-high-impact touch-up, put in the nice furniture, then you can squeeze a further 50K out from the buyer!

I wonder if there is any MLS guideline on how long can an already sold home stay in the database. If there is none, the easiest thing I will personally do, if I were running the MLS and desperate, is just to let these sold homes stay to appear as if they are BEING SOLD, propping up the current market sentiment. After all, we are talking about tens of thousands of dollars per transaction at stake here!

Regarding the OC:

A good friend of mine bought a condo in New port Beach in 2003 with no money down. He got it appraised and refi-d in July. Get this, he paid $550, and it appraised at $1050. I'm thinking that July was the peak, and that appraisal was just to stroke his ego. It's a crappy place, but it's two blocks from the beach.

Now get this. He moved back to the EastCoast. He wants to keep it forever, because you know, if he sells it now, he will never be able to buy it again. It's empty right now, but at some pint he'll rent it. I've tried to tell him to sell it. Unfortunately, someone (his realtor) told him to expect at least single digit appreciation.

One last data point. We all love this guy. But we all know that he is an idiot. Does anybody local know what is going on with condos there? I kind of feel obligated to save this guy from riding it down. But then again, the dot com crashed helped me to wake up and smell the coffee. I kind of feel like he may be a better person and happier in life he goes through the beating.

Anybody know what's going on in the OC?

--Deo Vindice

"I’ve been in the bay area for more than 15 years….. "

Well then I take it back! But bay areans have been like this for at least 10+ years so you sounded new & surprised about it. I've been here for 32 yrs (minus 5 or so during college times).

How 'bout that mortgage biz update?

"Anybody know what’s going on in the OC?"

My buddy owns in Irvine. He says it's slowed down a bit, but maybe not sooo much. For example, back in the summer his friend was on a wait list, at least 2 phases out, for a new development, but now he's "lucky" enough to get in on the next phase.
I don't know if I'd call him "lucky".

"The reason I think the house in the bay is expensive, because I see it’s tripple the price in 2-3 years. This is not normal. How can you bought a house for 470, and it’s worth 800 after 4 years. The house is an old house. "

I agree...it is irrational, ridiculous, and it doesn't make sense.... The south east bay area (from hayward/union city down to milpitas) in particular has seen extreme appreciation because it has historically been "undervalued", compared to the peninsula and even the south bay.

@dt

When you compare between TX and CA, you said that CA do better, etc. However, do you also know that CA also more expensive than TX when it comes to expense. CA makes more money, but also spend more. So, what is the point of earn more, but pay more.

Chained-dollar economic statistics correct for inflation, which is why I said those are more accurate. (inflation measured by PPP, not CPI, so it's pretty accurate) Those show an even wider advantage to CA. I'm not making a judgment. It's just the data.

House prices can’t be double and tripple in 2 or 3 years. This can’t go on forever. It’s just not normal.

It is possible. However, any sustainable scenario would include exceptional economic growth and, most importantly, sharply increasing rent.

Rent level is not only a proxy to economic activities, it also shows the true cost of housing as determined by the market.

The only possible reason for price to diverge from rent beyond fundamental reasons (e.g. interest rate) is speculation.

(Yes, people prefer to own, but why have this become _more_ so?)

The only possible reason for price to diverge from rent beyond fundamental reasons (e.g. interest rate) is speculation.

Rents also diverge from prices during periods of regional economic restructuring. That is, when old industries decline and new industries take hold rents can rise rapidly while home prices fall nominally.

Thanks to those responding on OC prices.

My friend bought it from a couple who had bought a few years before for 250k. That means since '99 (I think), it has gone up 4x. This couple used it as a vacation home on the weekends. They bought it from the original ower who converted it to a TIC with two units. In other words, it was built as a cheap vacation house, and then redone with really low end fixtures and materials from home despot.

I think my 3 specific questions would be:

1. For what purpose would an end user buy an 1100 sqft top floor of a shack for 1050k? A weekend beach house? There has to be better deals for that price, especially two blocks back. You could get a SFH on a nice lot in Santa Cruz that far back from the ocean for less, even today. And you would be able to bump up and get 3200 sq/ft. It just doesn't make sense to me that there is a use for this property other than speculation.

2. Is my buddy's agent just feeding him a load of crap about prices going up, just at a slower rate? Methinks he is getting conned. As a point of reference, his realwhore gave him a pretty, stinky, sticky bud as a moving in present. Not exactly the mark of a true professional. What's really happening right now?

3. What about the near beach condo market, specifically? Newport, specifically. Is there something I'm missing? I know that it is a very desireable area. But there are many desireable areas. Just who is the end user willing to pay such a premium just because Newport is "Special"? A condo in Palo Alto costs less. What would the price have to be for a reasonable, good income earning person/couple to use it for what it was built for. i.e. a weekend beach retreat?

My buddy thinks he's rich. He's not overleveraged, he's just going to be severely disappointed. Why wouldn't it fall below the 550k that he paid for it? I might buy the argument that it is the increase in M3, stupid. But it's definitely not an increase in income, and the weather hasn't changed since '99 either.

--Deo Vindice

Could I offer a developer an amount I can afford (about 1/2 of listed price) and make an agreement with him that says:
#1) I am going to live in the house, not rent it
#2) I will not sell the house for 10 years
#3) When / If / I do sell the house the developer gets 1/2 of the profit (after every single thing is paid)

Now first …. is this a stupid idea on my part?

Not stupid at all. Expect deals like this after the bust with the availability of hedging instruments.

Rents also diverge from prices during periods of regional economic restructuring. That is, when old industries decline and new industries take hold rents can rise rapidly while home prices fall nominally.

It is still a "fundamental reason" (perhaps related to the microstructure of the market), isn't it? ;)

Then why would I want a Prudential Properties or Coldwell Banker sign in my new front yard for a month.

How about a Sotheby's sign? :-P

New thread: Spring Bounce

seattledude Says:

"NC is nice. I have some family there, but the problem is race relations are STILL pretty bad there, plus, you feel like you have to take a shower every 5 minutes due to the humidity. Californians moving to NC WILL have to get used to the humidity."

I never could.

San Jose to Ft. Bragg, NC Carolina was quite a culture shock.

I'd get out of the shower and five minutes later I'd be drenched from the humidity.

Had a lot of cool times a Myrtl Beach, etc.

Glad I'm out of there, though.

Ever try Monsoon season in Phoenix? Late June-August.
110 degrees fahrenheit, plus high humidity/dewpoint.
VERY FRIGGEN' HOT AS HELL!

Lived in Flagstaff for a year as I got my MBA from Northern Arizona University. Not a bad place to live for a little while. On top of a 7,000+ ft. mountain & hippy Earth Mother chicks from Sedona.

Etc...

Dear Slacker McMDMA,

I'm going to barf the next time I hear you bitching about how terrible boomers are because we smoked a joint once. "Rave" on my friend. At least now we know what the "X" stands for.

DeoVindice Says:

"One last data point. We all love this guy. But we all know that he is an idiot."

Like the old saying goes, "An idiot and his money are soon parted."

I know more than a few lovable idiots.

The road to hell is paved with lovable idiots.

Just what the world needs: another lovable idiot.

Muy stupido?

In Idia, the village idiot is a revered figure.

Eh?

This whole situation is so crazy. I think I'm losing my marbles.

Oh, well...whatever, nevermind. --Kurt Cobain

"So lets do the math 4.2 original asking price. Taking offers at 3. That is more than 25% difference."

I can't believe this kind of talk.

$1.2 million difference!

I could retire today on $1.2M.

Amazing!

Garth Farkley Says:

"Dear Slacker McMDMA,

"I’m going to barf the next time I hear you bitching about how terrible boomers are because we smoked a joint once. 'Rave' on my friend. At least now we know what the “X” stands for."

MDMA = Ecstasy?

Never tried it, but I bet it beat Boomer Ex-Lax.

Bill Clinton smoked a joint...ahem...once.

Oh, that's right. He didn't inhale.

What did he do with that cigar and M. Lewinsky?

Oh, that's right. He didn't inhale.

Inhale this!

dt Says:

"Many people are so desperately to own a home that they bought a house and have no savings left. Many relies on the renters, who rent their rooms, to help them to pay the mortgage."

"What is the point of buying a house and rent out your rooms to strangers. This is not happen to only few families. But majority family are doing that."

The point?

The point you ask?

The point is that California IS heaven!

It IS the promised land of milk and honey and opulence and play!

California is beyond your wildest Nirvana!

You want the goodies, you must sacrifice your body, mind, spirit...and bank account!

Now get out there and grab the bull(shit) by the horns!

And always remember the cardinal rule: California real estate NEVER goes down!

It IS the promised land of milk and honey and opulence and play!

Moreover, California is so special that eventually only 144000 families can afford. :)

test 8O