patrick.net

or May be let's have a First ever meetup of all Patrickers somewhere in Bay area. Call ABC news, CNN or at least start with posting youtube videos. May be we can bring a change.

So what do you suggest? A tax credit rent to make owning a home and renting it out more profitable?

I don't have many ideas but i want this preferntial treatment to owning real estate to be stopped. Why are they paying First Time home buyer tax credit out of my cheque ?

I agree we should make some presentation because the pain of high house prices is never presented in the media.

We should be very clear that the tax credit is harmful by raising prices and lowering tax revenue at our expense.

I don't want any tax credit or guaranteed loan. I just want those things to STOP so that we can have real affordability, which means lower prices, not more debt.

I couldn't agree more with your last statement, Patrick. Lets hope the tax credit expires November 30th, 2009!! Of course I wonder if that will happen. You can always count on a politician from either party to mess things up!! I call the tax credits home unaffordability programs. Of course most idiot homeowners will tell you that we're at the bottom now and tax credits are necessary from keeping the system from collapsing. Well it will collapse sooner or later, we're just prolonging the pain of it all.

There is really huge political pressure to inflate house prices because:

* millions of "owners" are underwater because their houses are worth less than the amount owed
* the only thing that keeps millions of workers obeying their boss is the fear that losing a paycheck means losing their house equity -- but now the equity is gone anyway
* thousands of banks are technically bankrupt because their collateral is now worth less than their loans

So basically, all house owners and emmployers are against us, along with all the banks and all the politicians they own.

Go a few steps further than simply letting the tax credit fade away. If you truly want affordable housing with a sustainable supply of homebuyers, you must:

1) Eliminate the $8000 first time homebuyer tax credit.

2) Eliminate the Mortgage Interest Deduction.

3) Eliminate any adjustment to property taxes paid by the homebuyer.

Unfortunately, with current prices, these efforts would make it more difficult than ever for the first-time homebuyer. Over time, it would force a continued pricing adjustment, but the pain due to everything that has happened can not be avoided at this point, even with more stimulus efforts. Continued meddling with market stimuli will only prolong and exacerbate the problem.

Here are my ideas. Feel free to elaborate:

- Stop using my tax money to pay for first time home buyers
- Stop using my tax money to pay for banks with bad loans. They deserve to be closed down because of their greedy decisions
- Stop using my tax money to pay for Cash for Clunkers
- Stop using my tax money to pay for GOVERNMENT Subsidized Housing Support

ME: renter, avoided cash-for-clunker debt, no credit card debt, plan to avoid cash-for-whatevercomesnext debt, willing to keep working and paying taxes, saved up 6 months wages to use for DP ---- yep, I'm extra screwed, and it's strating to bug me a tad.

@Patrick,
Doesn't it get old hearing about "underwater" on houses?, yet every single car, truck, boot, shoe, shirt, television, or any other purchased item that is not deemed a "collectable" goes "underwater" 10 seconds after purchase. The whole premace of instant equity and apprieciation is a joke - aint it?

Why don't the politicos force a higher worth on 1989 GMC trucks? I paid almost $20K for it and now I am underwater!! Where is my rep on this? I should be getting a check back from GMAC, after all, I paid more than it was worth. Right? (__l__)

Renters don't pay property taxes. Good luck with that.

stocksjustgoup says

Renters don’t pay property taxes. Good luck with that.

According to many "landlords" who have chimed in in various places on the internet. Renters do pay property taxes..indirectly.

There was a mentality of, "I'll buy a house to rent it out" that was rather overwhelming in this bubble. It drove up home prices because suddenly, everyone was an "investor" in RE. Many "investors" expected an instant return, at least where I live, so the rent payment was to cover the mortgage, insurance, taxes and provide some profit to boot. This, in turn, drove up rental prices. Lather, rinse, repeat.

So if one were to pose the argument that renters DO pay taxes (indirectly), then are the "investors" actually paying any taxes? The answer, in varying degrees, would be yes, if they charge less than the monthly PITI payment for the property being rented out.

I will not even start with HUD programs for rental assistance, business loss claims due to empty rentals, house flipping, RE hedge fund investments, etc...

I've been renting for the past two years, and I know for sure I wasn't (and am not) paying enough in rent to cover the mortgage(s) and property taxes. I'd feel really, really stupid if I was, because if I'm paying a person's mortgage(s) and property taxes, I'd seriously wonder why I don't just buy a house of my own.

That IS supposed to be a perk of renting... that you pay less to live there than you would on a typical mortgage and property taxes.

I don’t want any tax credit or guaranteed loan. I just want those things to STOP so that we can have real affordability, which means lower prices, not more debt.

+1

But it looks like it's too late, the whole system is designed exclusively with unreasonable debt in mind. So it very well could be the case that if we miraculously got market economy back today it would crash at once GD-style. Not to mention all the vested interests from Wall St and a socialist administration.

In addition, it could be just our local SFBA problem - in many other areas of the country (e.g. TX) you still can buy a relatively new house, sometimes even on one income. Only in CA you can have an educated middle-class family with 150K+ of income forced to rent. In real America renting seems to be for losers.

Curiously enough, most of my colleagues owning a house in the Valley admit that they bought 10+ years ago and would not be able to do it nowadays.

OK, there are a lot of us who want an end to government "help" in the housing market that just makes things much more expensive for us. (And OK, I support universal health care even though that is government interference too. I just think health care is life and death, and the free market doesn't work there. Renting vs buying is not a matter of life and death. It's a matter of comfort and preference.)

So can we propose a really simple federal law about real estate that has a chance of getting passed? Maybe only three points, something like this:

* Government policy should aim at lower house prices, not higher debt. Banks be damned. Fannie and Freddie should die. The mortgage interest and property tax deductions should go away, like in Canada.

* All bids on houses should be published immediately on multiple non-realtor free websites for all to see, with date, amount, and bidder name. Biders must prove real financial backing in the amount of the bid, or the bidder is committing a crime.

* All sellers who advertise a price anywhere MUST accept that price if there is no higher bid in 30 days. Any house advertisement or MLS listing becomes a legally binding offer to sell at that price barring higher bids.

This will cause great moaning and gnashing of teeth among current "owners" and banks, but after we get past that, we'll have a housing market which rewards savers rather than traps people as debtors.

* Government policy should aim at lower house prices, not higher debt. Banks be damned. Fannie and Freddie should die. The mortgage interest and property tax deductions should go away, like in Canada.
* All bids on houses should be published immediately on multiple non-realtor free websites for all to see, with date, amount, and bidder name. Biders must prove real financial backing in the amount of the bid, or the bidder is committing a crime.
* All sellers who advertise a price anywhere MUST accept that price if there is no higher bid in 30 days. Any house advertisement or MLS listing becomes a legally binding offer to sell at that price barring higher bids.

Whoa, be very careful there. You just might create a fair market.

I have to agree with all of these points. If we can keep bank interests and state (federal) interests separated, and remove monopolies from the market, then there might just be a chance for first-time buyers to actually afford a home.

@Patrick,
Housing: I agree 100% at ending Gov supported housing stuff. Remove HUD, and end Section 8, and everything you have said.
Health Care: I would support removing the profit ability from the providers first, and then public funded health care would be more like public safety (and an arguement making the compairison is valid IE a healthier public makes for a healthier republic) and public safety / defense protects the rich and poor (cose to) the same. But, as long as Docs and Pharms get big bucks due to welfare style auto-pay systems, and since I have personally made sacrifices to have protection from sickness for me and my family in the form of insurance, I just can't agree with what is being tried by the left at this time.

""* All sellers who advertise a price anywhere MUST accept that price if there is no higher bid in 30 days. Any house advertisement or MLS listing becomes a legally binding offer to sell at that price barring higher bids. ""

awesome idea. dovetails well with my Lender based price opinions for listing REO's. excellant ideas Patrick.

anghrist says

1) Eliminate the $8000 first time homebuyer tax credit.
2) Eliminate the Mortgage Interest Deduction.
3) Eliminate any adjustment to property taxes paid by the homebuyer.

I would, just as Patrick listed fully transparency to bidding process, with all all parties present just eliminating
all the riff raff pumping of prices.

I'd like to add essentially the same rules as with any other security or commodity margin trade, including:
1) federal limit on leverage at time of purchase or refinance
while requiring 50% of owner's equity may sound like too much, requiring 33% or 25% percent might be reasonable
2) enforcing margin call for all new lending contracts using RE as a collateral
it definitely needs more thinking, but if it could prevent another RE bubble, why not? (Think how much this measure alone can affect person’s decision to buy house with small or zero downpayment, or to participate in speculative RE investment schemes during housing boom times)

Hold on a second, we want FEDERAL GOVT to get away from our life, NOT to introduce any more regulations.

So, in principle, I am against any more regulations you guys proposed above.

The market fails without federal government regulations. Unfair business practices eliminate or absorb competitors until there is no competition left.

Monopolies benefit no one except the monopolist. All the benefits of a market economy go away when a monopolistic group limits choice.

Then you just have rent-seekers able to demand payment without providing value. Like realtors.

Government regulation in limited amounts is the savior of the free market, not its enemy. Too much regulation is bad, but too little is worse.

What would it take to get Patrick on TV? Surely one of the prime time cable news shows could set up a split screen with Patrick on one side and a NAR spokesperson on the other. I'm thinking he should do Glenn Beck or O'Reilly (be sure to bring a falafel with you if you do O'Reilly)...of course I'm kidding about these two jokers, but not the falafel.

Regardless of who's show it is, it would make for great television to have the debate. Hopefully the rest of the country could at least stop and think about how rigged the system is.

Patrick, are you are good debater in person?

I support all of the Patrick's ideas , but i would like to add another idea which was floating around on another thread -Elimination of 6% commission to real estate agents. They should either work by hour or get a real productive job. This would also help in keeping the prices normal.

Folks most important thing is let's just not talk or get rid of our frustration by writing few lines on this forum BUT do something constructive about it. I mean we can all plan a meetup, signature petition or something which can attract media attention to our side of story.

Just being mad or complaining that something isn't fair won't change much of anything.

Instead, you need to have a good argument that home ownership is not something that government should be encouraging (or even discouraging). Don't argue "fairness" or anything of that sort -- look at crime rates, economic benefits (or harm), school performance, and financial stability.

From what I've seen, there's only been one major study on any of these topics in the last 30 years and the conclusion was that housing stability (that is, living in the same place for a long time) has a strong positive correlation with better school performance. That argues somewhat in favor of both home ownership and rent controls.

If you can't argue that government should support (or discourage) home ownership with its policies, then you don't have much of an argument at all.

The president doesn't care about renters because they don't contribute to Wall Street's great debt Ponzi scheme, which is a losing proposition in an era of artificially high prices anyway. That is also why savers are penalized. Buy outright, and you don't have to play. I'm sad to say it is not the president's responsibility to shore up your sense of entitlement, although I understand your righteous indignation. If you can't buy where you want to, move. Obama can't change human nature (and that is not his job anyway); right now it is tilting strongly in favor of the stupid and the greedy, and he is going along with both. Besides, life isn't fair. You can't buy a house where you want to or right now? Move or deal with it.

cashmonger says

What would it take to get Patrick on TV?

I was on Nightline maybe two years ago, but that was taped. I'm not a great debater, except maybe about housing. I've heard it all and can come up with good counterarguments quickly.

It does seem to be true that renters are ignored because they do not contribute to the national Ponzi scheme. But I plan to make the top news link on Monday (the biggest day) be a specific proposal with three points:

1. Government should officially state it is opposed to encouraging mortgage debt. It's like the first step in AA.
2. All bids and sales should be immediately public on a website, with false bidding a crime.
3. Sellers must accept their asking price. No bait and switch. It's already a crime when selling toasters, so should be a crime when selling houses.

Housing stability is good, and I think we can achieve more of that by people owning houses outright via low prices. The 6% commission sucks, and it is monopolistic rent-seeking to demand it when there are only weak alternatives available. But if all bids are public, that effectively makes all offers for sale public as well, and defeats the MLS monopoly.

#2a. Any and all bank "give backs" for improvements or repairs should NOT be reflected in the sales price without the total amount being shown. EX: Bank sells a house for $300K, but the bank agrees to $200K worth or repairs. That information makes a difference. If the sales amount is just advertised without the repairs amount, then a false value is assumed. Does my ammendment make any sense? Be brutal.

So basically, all house owners and emmployers are against us, along with all the banks and all the politicians they own.

I'm not so sure employers are on that list. Employers see high housing costs as putting an upward pressure on wages.

Do you really think that employers believe that most employees only keep working when the employees have a mortgage? Just because one pays off a house or becomes a renter does not means one no longer has bills. Still gotta eat, drive, and pay taxes, and save for eventual retirement.

Bap33 says

#2a. Any and all bank “give backs” for improvements or repairs should NOT be reflected in the sales price without the total amount being shown

Good point. Must use a standard "net" figure to prevent various methods of "rebate" or "allowance" manipulation that disguises actual price.

Patrick, do you have a link to that 2007 interview?

Are you saying that you will be in the news this Monday or are you saying that when you get on next, you will make sure that the story runs on a Monday?

HeadSet says

I’m not so sure employers are on that list. Employers see high housing costs as putting an upward pressure on wages.

And as such increase in wages are not a pass through to product prices and customer, but the higher costs are eliminated locally and set up elsewhere in a different lower cost region national or offshore. Its no wonder that new CEO at HP's first step was to cut all local jobs during restructuring. Carol Bartz at Yahoo is doing the same hatchet job with local jobs. In both cases, recent home buyers who overpaid, older homebuyers who bought years and decades ago, and renters who dont have a high debt burden get their jobs axed all because of high housing costs.

At least the CEOs of Silicon Valley corporations should have been more publicly vocal in recent years regarding the high home prices in SV and the trade off of losing local jobs. It would have helped. But then again SW Engineers think they are sacred cows and cant be touched.

ON THE RECORD CARL GUARDINO

"You mentioned housing. It probably is the top concern we hear about in Silicon Valley from both CEOs and employees in terms of local issues. Does that have an impact? Let me put a finer point on it.

Hewlett-Packard and Dell are the top two computer-makers in the world. Corporate headquarters for HP are located in Palo Alto and Dell is in Round Rock, Texas. Obviously, they both have people and facilities around the globe.

In those two communities where their corporate headquarters are and where a lot of research and development takes place, the median resale price for a home in Palo Alto is about $1.6 million. In Round Rock, Texas, it's about $180,000, except the home and property are bigger.

We hear from HP all the time that a huge deterrent to the ability to recruit and retain people anywhere near Silicon Valley is the housing issue. We don't hear that from Dell, which is also a member company, about their operations in Round Rock. It does continue to plague us and we will continue to sound the alarm."

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/05/13/BUG91PO3US1.DTL#ixzz0SH4ch9Qw

2. All bids and sales should be immediately public on a website, with false bidding a crime.

Patrick, did you actually state this on ABC's Nightline?

Why not make it immediately available during the bidding process with full transparency with all party names and amounts?
After the fact, closing of contract, does no buyer any good.

Final sales are actually published in the San Jose Mercury News, but they are several weeks/months old and are little use.

http://www.mercurynews.com/realestatetransactions?appSession=452196944089836&RecordID=403517&PageID=3&PrevPageID=2&cpipage=1&CPIsortType=&CPIorderBy=

Patrick,
What are the total number of hits on your website and what is the total number of people who have njoined this forum. I have been quietly forwarding the link to this all the people i know. If we have significant numbers then few emails to the local news channels would do it.
Can anyone suggest a way or an Action Plan by which we can attract more media attention to the issue of "un-affordable housing". The entire system is hell bent upon just sustaining the artificial bubble which some greedy people created.
We should do something about it, just can't let go.

"Can anyone suggest a way or an Action Plan by which we can attract more media attention to the issue of “un-affordable housing”. "

First off, its not really about un-affordable housing. If you use that term, government will step in and start with all kinds of social programs and tax spending leading to nowhere missing the real issue at hand. Government 'unaffordable housing programs" have historically and nationally resulted see subpar housing being but up with income limits for the poor. Ghettos!

The real issue is the realtor misconduct and lack of transparency in the process of bidding/buying. The recent move by congress to change appraisal process was an example which put no additional tax burden or government aid was involved, but it forces a process change in the market place which eliminates fraud by realtors and mortgage brokers. You take away phantom offers and impose time limit on deals, will create confidence in the market.

If you contacted KGO Mike Finey, he would laugh at you saying SF real estate never declines.. which he did 2 years ago. I doubt even with subprime/Alt A he has changed his view. Media people still stuck on blaming subprime for the housing declines. They have'nt a clue that prices are so out of step historically trends and incomes, its not worth even talking to... They are clueless, misguided, and uneducated in financial matters.

Sarbanes Oxley is an example of regulation which does not increase government involvement but changes the process, behavior of parties, increases transparency and imposes fines/penalties when uncovered. And it has worked to the letter of the law.

You have to be laser focused on the exact issue you are pressing.

I would add to the list,
(1) full disclosure to buyers that home prices do fall, and it is the risk of buyers to understand and sign off to.
(2) realtors cannot discuss home or regions benefit (schools/jobs/etc), due to regional economies and financial events can and do change ... another risk buyers must understand and sign off to.
(3) any new 'significant events' like other and counter offers must be disclosed and reason for changes. All events are documented as to former and new parties involved and reasons. Documentation must be held by all parties for 7 years.
(4) realtor in question and realtor agency will be held accountable for any ethic violations and/or breach of real estate and are required to 'give back' any compensation earned from the transaction.
(5) realtors are not allowed to create 'side agreements' outside of original 'arrangement'.
(6) all interested buyers who wish to place bid must be present, with agent of choosing or no agent, along with other bidders present and their agent.
(7) any buying party not physically present during bid process, will not have any rights to make bid regardless if they have an agent present or surrogate representative during bidding process.
(8) upon final bid is accepted in writing-Countersigned by both parties, black out period begins with property in question is closed for any further bidding.
(9) Final contracts must be finalized within 24 or 48 hours.
--- normal process can fall after 9
Im sure you can add a dozen restrictions and process changes above. Now you have teeth and laser focused to the issue at hand.

Don't worry. When the Debt of the gubermint is monitized, the "home owners" will get the motherload of all bailouts. When the prinint press is used to destroy debt, people with no assets and just the paper money will howl even loader.

Sigh... Nothing to see here, Rome is burining. Just go about your lives and keep paying your taxes.

I thought it burned down back in 1929, or was it 1954, or was it 1972... maybe 1987 or 1991.. or finally was it 2000.

No matter its Ice Cream time! for me...

you can count me in