patrick.net

donjumpsuit says

My personal opinion is to buy a huge Single family home in Silicon Valley (translation= close to Google), and subdivide them into about 4-6 rental microunits.

I doubt you would get the permits to do this from the city, but who cares. I am sure some one will bring up problems with the mortgage or insurance by doing so, but also, who cares.

Nobody else seems to care. I think you could clean up. Catering to renters who want a nice little apartment on in a great neighborhood, with a nice outdoor space, rather than your typical shit apartment.

This is a great plan. Make sure no hoa though. When prices spike you can turn it back into an SFR and sell .... Or not these home are commonly torn down anyway - its 90% land value next to google i bet.

During last run up i had two roomates which was easy money. Now im not single so much harder.... Women make u poor, children make u broke. Ha

They are buying to flip all over, especially in the city, if it's going to auction you'll see it relisted again at higher prices after a contractor put some lipstick over the moldy walls. Nothing has fundamentally changed, it just took lower rates to get the merry go round spinning round again.

The tip is to go where the money is, for example, I'm sure plenty of flippers left Phoenix already and have headed for Vegas which was down hard, as desperation mounts and easy money flows from monetary easing and fractional lending process, Vegas should again be a hot spot again.

Im pretty sure a huge huge percent of the GDP is from flippers.

Renters and zero down buyers dont blow money at home depot its flippers and the rare monied owner occupant.

As much maligned as they are on this site, they actually improve housing and neighborhoods, renters do not. They take huge monetary risks and do actual real physical work, much easier to code widgets in cyberspace while living in a neglected rented crapshack.

PockyClipsNow says

New real estate bubble firmly in place. Lets share tips.

What happened to all the preventive regulations from the Dems ?

Was this new bubble from Wall Street and Banks ?

or just irrational exuberance once again from main street public ....

If you want to really go BIG:

1. Why fix up the places? Just say you fixed them, do almost nothing and flip them for profit. Reduce your costs. Besides, people like working on their house. If people like applicances so much, don't put in a bunch, just put in one.
2. Make friends with people who have authority to approve mortgages so that you can qualify to buy as many houses as possible. Get creative. It worked the first time and almost nobody went to jail.
3. In connection with #1, do deals with contractors who would have helped fix up the place, but instead refer the new owners to them and negotiate a cut with the contractors.
4. Prey on the fears and nesting instincts of people with babies or young children. Hand out leaflets near birthing centers and hospitals with large maternity wards.
5. Buy in the worst neighborhoods, but advertise them with names that suggest the houses are in the best neighborhoods.

PockyClipsNow says

In all of coastal cali Multiple offers are now the norm for the under 800k or so market. Bay area especially. We all know why

Because the majority of people don't know fuck about shit.

Very nice. California's housing boom is back. Everybody that made big bucks buying 5 houses last time will buy 10 or 20 houses this time! If you missed the boat last time, now is your chance to cash out big time! As PockyClipsNow already mentioned, you can ONLY WIN. If things go sour, no problem, government has everything in place for debt forgiveness. Purchase loans are 100% safe to default on anyways in CA, but on refinance-cash outs: just keep 25% of the money that the banks hands you on hand in case of possible taxbill later on, so if you cash-out let's say $300k then put $100k away and blow only $200k on whatever you like. I don't care about the taxes, they are only paid on profit. Paying a lot of taxes means you made a lot of profit. Nothing wrong with profit.

PockyClipsNow says

Its not in bubble yet, just rapid upward price movements.

Fools and their money always have a way of parting. Good luck out there, this listing price bubble will be short lived. Just wait until the masses start doing their taxes come April 15th. Everything going in the shitter then. Mark my words.

Ha. I guess every pyramid scheme has to convince a new round of people that they are just going to make the cut (if they act NOW!), and they will be able to sell for big profits somewhere down the line. Good luck with that. Pass.

PockyClipsNow says

Im pretty sure a huge huge percent of the GDP is from flippers.

Goddamn, man, why do you have to sound so scientific every time you make an observation?

PockyClipsNow says

As much maligned as they are on this site, they actually improve housing and neighborhoods, renters do not.

Sheeeit -- on this site and a host of others, and by anyone registering even a faint blip on an EEG! Slapping some bottom-shelf ceramic tile throughout a place and Kilzing over water damage is hardly what I'd rate improvement, let alone good ol' fashioned American industriousness. It's just a buncha welfare queens taking advantage of government subsidized dipshittery in bubble 2.0.

PockyClipsNow says

They take huge monetary risk

Yeah, they're like modern day Preston fucking Tuckers. We should all stand up and salute them as they trail blaze a path to Home Cheap-o.

Give me a fucking break already...

From Fox News yet, Housing Bubble 2.0, completely speculator and Fed driven, it's all in there.

http://video.foxbusiness.com/v/2152197530001/stockman-this-is-the-start-of-housing-bubble-20/

I NEVER watch FOX news but actually a decent segment. I believe that this scenario described within is basically true for most real estate markets. I still don't believe that this is the primary reason for increased prices in the SFBay area. I believe that this has been primarily created by a combo tech boom and next to zero new housing being built over the last 5 years.

Buster says

in the SFBay area. I believe that this has been primarily created by a combo tech boom and next to zero new housing being built over the last 5 years.

So you think the balance between houses lost to foreclosure, sales to investors sitting empty is not the primary restriction on supply, but the slow to nothing building that has happened the last five years? That makes sense but I don't remember reading anything making that argument work.

I agree with the Fox segment, makes perfect sense. But does it apply to SFB area? I don't know. There is pent-up growth and good salaries. I know a couple who just bought (in San Diego Area). They are young professionals and just saved 100K for their down payment in a year's time. People got money here.

I think we all just need to concede that the real estate market is not based on fundamentals, and hasn't been for some time. Nor is the stock market.

So the question becomes, how to succeed in an irrational market. What are the warning signs of an implosion? There were town criers in the last market run up nearly the entire time prices were rising. They were right that it was a bubble, but it was a bubble that lasted for 6'ish years, which is plenty of time to make a small fortune.

A better discussion would be: "At what point do you know its time to pull the rip cord and bail out?"

You have to track inventory in your local market like roberto-wog. When its going down prices will trend up. When its way higher and trending higher you might want to list for sale at agressive price - easy to undercut the greed heads asking top dollar in declining market.

Obviously april 15th will only make people buy MORE homes as RE has huge tax savings. Anyway theres no inventory so prices will go up up up until there is much more for sale then stop rising.

Housing is priced way too low now in this 2% mortgage world. You can live in a 500k home for about 1200 a month. You could also rent a 1 bd apt for 1200 a month. Very out of whack. Rents not going down so prices will rise, back to 06 peak in 2 years in nice areas. I see asking prices already at 06 prices.

gbenson says

I think we all just need to concede that the real estate market is not based on fundamentals, and hasn't been for some time. Nor is the stock market.

So the question becomes, how to succeed in an irrational market. What are the warning signs of an implosion? There were town criers in the last market run up nearly the entire time prices were rising. They were right that it was a bubble, but it was a bubble that lasted for 6'ish years, which is plenty of time to make a small fortune.

A better discussion would be: "At what point do you know its time to pull the rip cord and bail out?"

With stocks you can increase your exposure to low-beta and decrease you exposure to high-beta stocks when you get the feeling that it may be time to bail. Plus a few short hedges.

MsBennet says

I agree with the Fox segment, makes perfect sense. But does it apply to SFB area? I don't know. There is pent-up growth and good salaries. I know a couple who just bought (in San Diego Area). They are young professionals and just saved 100K for their down payment in a year's time. People got money here.

A young professional is able to save 100K in a year? that would require at least a 230K salary, which is reserved for directors at most companies around here, and those jobs aren't filled by young people. Don't kid yourself, the vast majority of buyers here use FHA 3.5% down or they are investors.

if two IT pros who make 100k each live at home with a parent for a year, they EASILY can save 100k in a year.

Lets remember mulitgenerational households are the norm in the rest of the world. Only in america does everyone 'cant stand thier parents' and have to move out asap. its a pricey luxury.

JodyChunder says

Because the majority of people don't know fuck about shit.

lol

A Shit Leopard Can't Change Its Spots
http://www.youtube.com/embed/24RgMIochm4

American immigrants help their kids with college costs, so their kids don't have the debt overhead that baby boomers kids face.
With less debt to pay back, the young professionals can afford to buy a house and save for retirement.

Baby boomers are sucking the life out of their kids future.

I can't believe we're right back to where we were- right in a position that got us into trouble during the recession. I bought a year ago, but I am not one bit happy about any sort of housing bubble. The reason is because I've only been in the BA for 12-13 years and I've already seen several bubbles inflate and pop. The end the SAME way every single time, which is to say they screw the economy. From the way I hear people talk about houses here you'd think the recession never-ever happened.

edvard2 says

From the way I hear people talk about houses here you'd think the recession never-ever happened.

There was a recession?

Yeah bubbles are stressful it puts me in an mood where i feel
Like i have to be in on it or miss out on ez money. To compare in last bubble people would buy rentals that would bleed money monthly. Now prices and rates are such that most homes will rent at profit even with a mortage. So there is huge upside left. Were only in year 2 of the next up cycle.

epitaph says

the vast majority of buyers here use FHA 3.5% down

I used to think that, too. Sadly, when you go shopping for houses, you learn that many people in these hyped markets are actually putting 20% down on $700k starter homes and the 10%-or-less crowd might as well write their offers on toilet paper.

FHA is getting laughed at unless you are shopping in the Inland Empire or buying a ghetto shack for $300k.

Buster says

I believe that this scenario described within is basically true for most real estate markets. I still don't believe that this is the primary reason for increased prices in the SFBay area. I believe that this has been primarily created by a combo tech boom and next to zero new housing being built over the last 5 years

Tech boom started decades ago..go back to the 70s .. it frankly ended by 2000..
in that time we added over 400 public companies with many employees working in SFBA..
and even then prices didnt inflate to such an insane level.

but today... its different we are down to 200 public companies, not much start ups ... surplus of tech employees..greater focus on media companies and not tech and most employees work outside of SFBA in other states and overseas...

and frankly we added a shit load of housing since 2000 across SFBA.....

no.. its the new insane uninformed migrants coming here... overpaying over borrowing way way over average incomes ...

Philistine says

are actually putting 20% down on $700k starter homes

they are putting down everything they have saved as down payment !
and rolling the dice... Fools! they will lose their shirt !

edvard2 says

From the way I hear people talk about houses here you'd think the recession never-ever happened

Like its been said decades ago.. when the economy is down (sneeze), capital spending takes a major downturn (turns to a flu) for equipment/software makers as orders are canceled and shipments go off a cliff.. as such we have deep restructuring, consolidations and layoffs. people often think tech is immune .. but thats not the case... its often magnified in the SFBA.

epitaph says

A young professional is able to save 100K in a year? that would require at least a 230K salary, which is reserved for directors at most companies around here, and those jobs aren't filled by young people.

that is why afford-ability is down to 20-25% of current owners able to buy their own
home at current market prices and median incomes.. compared to 70-75% in mid 90s.

clearly we havent corrected enough even based on past historical norm...1980-90s

http://www.census.gov/hhes/www/housing/census/historic/values.html

I can't compete with all-cash, so I'm waiting for that bubble to dry up. Since you can't sell a home with a button click like you can stocks, I can somewhat sense investors undercutting their home prices for quicker sales, leading to a quick but sharp dip down.

I saw that 60 Minutes piece of China. If that's where the all-cash money is coming from, it's only a matter of time before that comes falling down to Earth.

Lots of people in here said it was foolish to buy 1 year ago. They said prices were going to drop 50+%. I saw conments talking about 1970 levels. Now were hearing words like bubble. I wonder if these people will ever be homeowners. Maybe these are the non working jealous liberals sitting on their asses waiting for the Dems to give them another handout. They already got everything else, food stamps etc.... Why not give em a house? Why should we even work anymore? Maybe I'm just being racist.

postbubblesucess says

Maybe these are the non working jealous liberals sitting on their asses waiting for the Dems to give them another handout. They already got everything else, food stamps etc.... Why not give em a house? Why should we even work anymore?

Wrong. I'm a working liberal who saved up a ton of cash and bought last year. WTF does liberal or conservative have to do with housing?

exfatguy says

so I'm waiting for that bubble to dry up.

Good luck with that plan. I am an all cash buyer and haven't been able to get anything in 6 months because all these idiots grossly overbidding on anything remotely interesting. I don't see how it's going to stop until inventory opens up dramatically, or we start hitting numbers where speculative investors are having flashbacks of the last crash.

Anyone who bases their offers on sound math is having a really tough go of it and it's only getting worse.

I've already started moving my cash into other investments (I'm starting to give up) because I can't bring myself to play the speculation game.

This is going to be massively entertaining. The fervor is rapidly approaching 2006 levels, and we are only 1 year in. As I have said before, this next bubble is going to be the "real" one and make the last one look like a practice run. The last one was fueled by ignorance and greed with the government being largely unaware of (or just not caring) what was going on. This time, it is fueled by the same ignorance and greed, except that the government is backing it as hard as it possibly can.

While as a prospective house buyer this irritates me greatly, it is at least interesting to watch some people that I thought of as rational, intelligent folks go willy-nilly and do silly things to get into houses. Gotta love those FHA loans! Some friends can afford it fine, but I have a few that I really wonder about. The one upside, although small, is that rents in my area are continuing to soften a little. With "Rental Investnent" being the hot game of the day, rental inventory is starting to increase , especially with all of the very large new apartment complexes that are being built and aimed for completion this summer. Rents went nuts last year, with a 40% spike at one point in Mountain View (and then a 10% drop about 6 months later), so at least I am not going to have to deal with moving because my landlord wants to jack rent up $260.

I am not sure what will initiate the next crash. Wall Street is doing the exact same BS as it did last time, so there is always that time bomb. For the SV more specifically, there is the whole "pile of start-ups with unproven business models" thing, and it probably only takes one blow-up to scare VCs off of the web-media bandwagon. Who knows though. The fact that Zynga is still in business at all tells me that the whole environment is far more irrational than I realize.

The only real solution I see is leaving. I could stay and deal with the workaholic self-important masses of the SV and be a slave to my house, but get nice weather. Or, I could move elsewhere where, generally speaking, the only downside would be the weather and the people inhabiting the area aren't the equivalent of a locust plague in the fields of my happiness and peace of mind. I am stationed in Seattle for the whole month of march and my wife is coming up this weekend to hang out. We have been considering moving here for a couple of years, and I think that we'll decide once and for all this month.

OK heres a tip which I have yet to try (when i do I will let you guys know if it works)

1. approach new listing that is priced 100k under market on purpose to allow listing agent maximum buyer pool.
2. Use listing agent to try and make offer -all cash and verbally say 'hey if you get me this house, i will do a fix n flip and you can list it for me'.
3. CHA- CHING

im pretty sure this is fairly common in high priced low inventory markets.

bmwman91 says

While as a prospective house buyer this irritates me greatly, it is at least interesting to watch people that I thought of as rational, intelligent folks go willy-nilly and do silly things to get into houses.

It is indeed ridiculous. We bought last year but I'm pretty sure now we wouldn't be able to. It really did change that fast and for no good reason. To me this massive spike and creation of yet another bubble is a threat to the economy. It doesn't matter whether you own or rent. This is bad for everybody. All bubbles end badly. That this one seems to already be out of control is fairly serious.

edvard2 says

It is indeed ridiculous. We bought last year but I'm pretty sure now we wouldn't be able to. It really did change that fast and for no good reason. To me this massive spike and creation of yet another bubble is a threat to the economy. It doesn't matter whether you own or rent. This is bad for everybody. All bubbles end badly. That this one seems to already be out of control is fairly serious.

Yup. At the end, the only winners are the 0.1% that are driving all of this through our bought congress and Federal Reserve. This is yet another shake-down of the productive classes, and likely the biggest one yet for Americans. The oligarchy is going to push us straight back into Feudalism if nothing gets done about it.

bmwman91 says

Yup. At the end, the only winners are the 0.1% that are driving all of this
through our bought congress and Federal Reserve.

Right on ! I wanted to quote this statement of fact because I believe it is not 'Dr. Obvious' to everyone.

For me, it hit home that there is "officially" a bubble during a cab ride to the San Jose airport last month. The driver started talking to me about RE investment and how it was so easy to make money. All you had to do was get approved for the biggest loan you possibly can and then sell in a year or two to capture the profits. The key is to buy the priciest house that you can since percentage increases on an expensive value mean more money for me, he explained. All of his family members were doing it, or working on doing it, he explained.

So, when cabbies start talking to me about how easy it is to speculate on $700k+ houses in the cities of Santa Clara and Sunnyvale, I know that it is in full swing. I have overheard similar conversations in airport lounges and on airplanes between SJC and Sea-Tac. This is reminiscent of the Joe Kennedy anecdote about how he knew to sell in 1929 because his shoe shine boy started giving him "hot stock tips." The shoe shine boy probably got his own hot tips from Joe, what with him being Catholic and all.....da-dun-CHING! Thank you, thank you, I'll be here all day!