patrick.net

But ‘Devil’ talks all about the endless government-backed literally “can’t lose” financial schemes that everyone was part of.

Sounds like the "Greenspan Put". I am seeing more parallel with Japan now.

'Devil' is a good book. But the theme of the book is mania, which reminds me of the current bubble.

Futile in having financial success? Yes. But if you just want to enjoy life, your luck has to be pretty tough to stop you.

True enough for anyone born in the developed world.

However, if a person is born in Somalia during a Famine, how is he going to enjoy life at all? Luck would be required just to find some worms to eat or to dodge racial cleansing by some warlords.

Everybody did get the "Hotel California" reference, right?

I do feel like that "I am a prisoner of my own device". Or at least, electronic devices. I have checked any time I've liked, but even "those voices calling from far away" I don't know that I can leave.

If we ever have a get together we'll have to have some pink champagne on ice.

Nope...there are lots of Walshes out there (Joe, Bill, Brandon & Brenda) and I'm not related to any of them. Andew Wyeth the painter is a distant cousin.

"Take your 250K and buy a house out of state, in a non-bubble area."

Just hold on to your 250k and rent for just a while.......see what everything looks like come 2007/8. It surely can be no worse than today! Or you could give me the 250k and when it all hits the fan, you would realize that it was a good idea since if you bought with the money, you would not only have lost the money, but you would have destroyed your credit.

"is prop 76 the new cali measure that will allow horrible teachers to be fired ,"

Forgot to answer this earlier. I don't think so...I believe it deals primarily with funding for schools and such. I tried to read a complete description of the proposition earlier and my eyes glazed over and my brain went temporarily comatose. Government is needlessly complicated, I agree. Besides, my husband is the legal CA resident, not me, so he can go do the boring reading and decide what to vote.

"Does it allow the state to raid money from local school districts?"

Here's a complete analysis:
http://www.ss.ca.gov/elections/bp_nov05/voter_info_pdf/entire76.pdf

Enjoy your coma. ;-)

Does it allow the state to raid money from local school districts?

Considering that school enrollment is dropping and families with kids leaving, do not expect the state to be more school-friendly in the future. Parents with school-age kids (Gen-X) have no political power whatsoever.

(Illegal immigrants will not be of help because they cannot vote.)

Good point, Peter P.

I suppose I am naturally inclined to oppose anything that Ahhnold proposes, just because, but that's not very logical.

Excellent article from Perma Bear... I mean Prudent Bear.

http://tinyurl.com/9hsrw

Morality dies when everyone is afraid to say “hey that’s wrong”

Yep. Many people think that it is wrong to say that anything is wrong.

This sounds crazy, but goes to Peter’s buyers union.

You mean Patrick's buyers union?

A tale of insanity and greed.

I know I'm late to the party on this, but this line (from Kurt S) really stuck with me. Clean and simple, it really captures the essence of the age in which we live. Almost Shakespearean...

Housing bubble:
A tale of insanity and greed
Propelled by idiots
Full of sound and fury
Signifying nothing.

Pop! -- Thanks for the link, nice article.

Here's one that might interest you: http://tinyurl.com/82xmh
This could be the answer to David Liar-eah's "Are You Missing the Real Estate Bubble (er, Boom)?"

Eagles, Pink Floyd, Shakespeare and fresh poetry from newsfreak & Wayne S --we're on a roll tonight.

"If I was a real estate agent and sales were slow, I would be convincing the seller to lower the price. Wouldn’t an agent want 3 sales of $400k versus 1 sale at $600k?"

That is exactly what all the realtors are trying to do, but they are in realtor hell because the seller is too stubborn to lower their price. The realtors have egged on the sellers all this time that RE just keeps going up and you'll get your price........but now they created their own hell.....The realtors refer to it as "pricing it right".......calling it cutting the price or anything else like that is considered bad etiquette in the business. This is the worst time to be a realtor when the boom starts to go south.

When is this market gonna roll over and die - the stops on my shorts are looming close - need a breakdown soon

I cannot tell the future with much certainty. Let's hope that it will turn before your stops are hit. But if they do get stopped out, we will still stay to trade another day. :)

They just got a bid for some renovations for $400k.

Ouch! They should wait till next year when contractors will be hungrier for work.
Also, hiring a firm out of Sonoma county might be cheaper--you think Jack?

Perhaps a firm out of Eureka? Naaaaa

You're right--time to contact a contractor in the Yukon.

Here's an interesting quote I found:

from SF Chronicle article Feb. 14, 1996
on Homeownership v. Buying:

..."Price appreciation is going to be mild in coming years--not like what we saw prior to the recession," says STeve Cochrane of Regional Financial Associates....He estimates prices will keep up with the 2.5 percent to 3 percent annual rate of inflation over the next 10 years.

Well, that's not quite like it happened, is it? Of course, we could always go back to that 2.5-3%...

Why in the world would I rather take $2700 rent = $32,400 p.a. less $18,000 property tax p.a. less maintenance (let’s say $5,000 p.a.) minus depreciation instead?
Without depreciation, that comes down to only about $9,600 p.a. taxable net income, give or take. With depreciation, the figure is lower.

Girgl, your figures illustrate why I scratch my head over people who drop serious coin to buy 2-6 extra homes. But, as you say--homes are mostly a long-term expense, possibly a hedge against inflation, but only seldom a good investment. And it's not just a recent trend, as I'm hearing that people have done this for decades in CA. I suspect this RE myth has simmered unchallenged for decades, and is now reaching the boiling point as economic conditions and wannabe investors hit critical mass.
The downside to this boom could finally dispel those myths.

Tim, you can get some sales data from ditech.com's instant appraisal calculator. It doesn't work for every property, but often it will tell you what a house last sold for and the year of sale, if you know the exact street address.

Mind posting how you obtained the sales data from Marin?

I used the Ditech appraisal calculator, which often gives what the property previously sold for; I hear Domania.com provides info too. This resource was discussed before on this blog, but there was concern about its accuracy. But, cross-checking with realtor sales records, I have found their numbers to be 100% accurate sofar.

http://tinyurl.com/9mxc5

Sonoma contractors are still able to charge top dollar as there is still plenty of work around.

Wow, that's a surprise to me, given the increasing inventory. I'm betting that situation will change by next spring. With the affordability index for a median home @ 7%, Sonoma is looking at a significant correction.

We get to pack up and leave on December 28th. Merry Christmas and happy newyear in a new home.

When is the end date of your lease? Are you on month-to-month?

"I used the Ditech appraisal calculator, which often gives what the property previously sold for; I hear Domania.com provides info too. This resource was discussed before on this blog, but there was concern about its accuracy. But, cross-checking with realtor sales records, I have found their numbers to be 100% accurate sofar."

I tried it on a dozen properties and found the sale price to be correct, however one property that actually was sold in 2003 was reported as last being sold in 1995. As far as the estimated values, they are dreamland estimations!

As much as i want that to happen, Aint gonna happen. You’re never gonna see a $250k house in Marin, Napa, Sonoma, Santa Cruz, etc…

Yes, I realize "aint gonna happen" is your tune...but what data can you provide to support a continual flattening prices or resumed appreciation, given economic fundamentals? You're not just going by your lack of optimism, are you? $250K is a bit of a "low target", but it may be possible in some areas. Once investor activity dries up, there's only so many boomers that will continue to move into Sonoma.

And, guess what? Inventory is really ramping up in Sonoma, with many "reduced price" signs appearing. Granted, prices are still high, but I have no doubt we'll see a repeat scenario of previous RE boom/busts. This time is no different, except perhaps in its magnitude.

Currently median price is 610K.
I suspect this will drop to about 350K.
BTW, thanks for the ditech info.

Glad to help!
Yes, doing some research/calculations...I reckon a 40-50% correction isn't impossible; something's gotta give.

@Thom:

Assuming you don't have a lease, check the date of her official notice of termination. If it's before Nov 1 (and your rent is due on the first of every month), you're out of luck. But if it's the first or after, I think she has to give you until Jan 1. (I don't know CA tenancy laws though..)

You'd still be mostly out of luck, but the 28th is an odd deadline. If it will make it more convenient for you, make sure you determine its legitimacy.

Beware of tenancies-at-will. They sound convenient, and they sometimes are...for the wrong party.

Currently median price is 610K.
I suspect this will drop to about 350K.
BTW, thanks for the ditech info.

Unless there is a major recession, which may be in the cards, this is not likely to happen.

Prices for given houses will drop that much, but the median may stay lofty because people will just buy larger, better homes with the same amount of money.

Prices for given houses will drop that much, but the median may stay lofty because people will just buy larger, better homes with the same amount of money.

Yeah....I'm guessing "buying up" is our plans, to a degree--since excess money might be better parked elsewhere. People may someday rue their urge to dump $100K into kitchen/ba rennovations.

Peter P,
350k was the median price 25 months ago.
I have no doubt, your comment notwithstanding, this will again be the median price in the not too distant future.
Unless “this time it’s different” of course.

I hope you are right. :-P

Also, if interest rate goes up significantly, median price will fall significantly too. :)

"As much as i want that to happen, Aint gonna happen. You’re never gonna see a $250k house in Marin, Napa, Sonoma, Santa Cruz, etc…
So you might as well just move out of state and be done with it and kiss your bay area dreams goodbye."

This is the reason it will happen....No area can be "rich only", there has to be cashiers, bank tellers, mechanics and the like.....these people are not rich! If they leave, who is going to fix a rich persons car? Who is going to ring up the groceries? Who is going to handle their banking needs? You are forgetting a very important factor here....many people have speculated and they have used suicide loans to do the buying because they figured they would get some signal as to when to get out but it is too late now........If the housing inventories in these areas aren't high right now, they soon will be. Remember, rich people don't get rich by making foolish investments.

Nov. 2, 2005--As housing prices cool and interest rates continue to rise, TrueCredit -- a leading provider of credit management services -- teamed with Roper Public Affairs to survey homeowners' views about a potential burst in the real estate bubble. Nearly seven in ten (68%) report that a sharp drop in housing prices would be somewhat or very unlikely to have a negative effect on their finances. However, when asked about the impact of increased interest rates, only four in ten (42%) said they would be able to continue to comfortably make their monthly mortgage payments. One in twenty (5%) say they would be forced to sell their house at a loss if an increase in interest rates occurred in the next year.

Frank

Those are some interesting #'s. Was that a national poll, CA or somewhere else?

Nearly seven in ten (68%) report that a sharp drop in housing prices would be somewhat or very unlikely to have a negative effect on their finances.

How many realize that a sharp drop in housing prices will affect their ability to refinance?

Everything will just continue to be ever increasingly, rich people and then people to serve the rich. Those of us in between we will be forced out of state.

It is those in between that caused the housing bubble. Not the rich. Not the poor. Sheeple. A financial mania. Nothing more. They all end the same way.

are you gonna tell me that the median household income in a place like Santa Rosa is 100k then? Nope sure aint. What does all this mean- it means it aint a good place for working families to live.

Haven't you answered your own question? Ultimately, home prices are driven by incomes, ie those who actually live there. Certainly, a few part of Sonoma, Napa, even Marin are settled by the wealthy, but certainly not most--and it will never be. Even Marin, where currently only 11% can afford to buy a median-priced home.

What does all this mean
This is not the end of the middle class, or affordable housing. However, I do think it means a lot of foolish buyers are going to lose their shirts.

It is those in between that caused the housing bubble. Not the rich. Not the poor. Sheeple. A financial mania. Nothing more. They all end the same way.

Couldn't have said it better Peter.

And regarding our friends in the UK...

Latest figures from the Department of Constitutional Affairs show a huge rise in the numbers of mortgage possession procedures issued in the county courts.

Nationally the number of possession actions entered into in the three months to September 2005 rose to 29,991, up from 19,359 from the same period in 2004 - a rise of 55%.

The number of orders made in the three months to September 2005 rose to 19,687 from 11,682 - a 66% jump.

...

"At long last the Chancellor has now accepted there is a bubble in the housing market. Now he needs to recognise that for many homeowners it is sadly bursting and that he needs to take action.

SactoQt: Here's my source...

http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&newsId=20051102005251&newsLang=en