patrick.net

O.K. Now I don't know anybody named seattledude.

I am a 57 year old boomer, I went to Woodstock, and I had copious amounts of drug fueled sex. My summer of love was in dog years. I never worried about education, retirement or career security because these were always accepted as a given. I have no children because quite frankly I don't think my trust fund would accommodate them.

Oh Jeebus what was I thinking?

I am 40, my Father is a drug addled boomer biker, never met my Mother. I raised myself, put myself through school, my favorite quote is from my HS "guidance" counselor, Surfer-X to HSGC "can you tell me how to apply for college" HSGC to Surfer-X "don't worry about it you aren't even going to graduate HS". Love it. I am a 5th generation Californian and am just old enough to remember what it was like. Originally from $anta Cash, but went to undergraduate school at Cal Poly (no dipshit, there isn't a which one, there is only one Cal Poly, SLO) SLO was amazing back then, now it could use a B-52 strike. Went to Cal Poly because my ex-narcissist GF's Mom suggested it, "why don't you go to Cal Poly", "because I won't get in", "why don't you apply and see what happens", "because I can't afford it", "why don't you apply for financial aid", "hmmm, what is the financial aid you speak of?" Worked in Oregon after graduating, ahhh aerospace in '91, company took a big poopy, I wasn't going to get laid off, but volunteered as the moral bit ass. Moved back to California, got a job in the semicon industry, ahhh semicon in 95, company and semicon took a big poopy, went to graduate school at Cal Poly, (ok, so there was a fair amount of surfing and skirt chasing also), went to work in IT circa '99 was amazed at tech bubble blow up, "I'm the vice president of desserts". Sure you are sweetie. Black razor, blue martini. Those jackasses from Razorfish. Feel like a fool as I worked in Japan for a few years and came back in 96 with about 50K in cash, a friend said buy Yahoo!, I didn't, I used the money for my MS. As I look back at my PhD in Materials Science from UC Davis, awarded with Distinction, funded by the Surfer-X memorial foundation, I have to laugh on how long and hard and how much fellatio I had to perform to get here. I advise not discussing whether or not there is a class struggle in the US. I "work" in defense and make 0.7Haha. I despise the boomers with all my being because I have witness first hand what they truly represent. Yes, some don't fit the mold, but riddle me this, why is it that the one's who object to the generations even object in the first place? If the generalization doesn't fit you, congratulations. Ok, now if you feel you have to defend your generation, what does that really say? Now back to our original discussion. My friend Nizo turned me on to this blog, at first I just came for the links, and then I realized I could voice my opinions on not just housing but the related greed (boomer filled orgies) behind it. Much happy. I have become hooked on the patrick.net junk and need my daily fix. There are several people here that I would like to have over to my pathetic rental in $anta Barbara for an ammmmmazing margarita. I am half white or as I like to say on job and school application, half Mexican. Many things really piss me off; I need not list them here. Yes Randy most flames end/(originate) with WWII and/or Germany/Hitler. See that's what I love about this site, amazing wit. Screw you HARM (note sarcasms, HARM actually gets a double sized margarita). I have great friends and one cat who I adore, my other cat Mr. Fuchs is presently not available but I remain hopeful. The bubble just pisses me off because for the life of me I can't figure bullshit like this out

And anyone who bought a house or condo here during that time into the early 2000s has done quite well.

What does this mean exactly? Ok, so you can borrow the money, but then it isn't really yours is it? Or you can sell the house. Which means you either have to take on an increased debt burden or leave the area. I cannot leave the area, I know of no other areas; I do not Grok other states.

Ok enough for now.

SFWoman,

Berkeins are fine, but the ugliest and most obnoxious POS handbag that I have ever seen is the LV Murakami bag, honestly the first time I saw those I thought someone was deliberately playing a joke on LV. It is quite a statement, any women carrying that handbag puts me off big time, it essentially spells out "I spend $2K to show you that I have no taste".

From a marketing point of view, it is smart, it certainly looks distinctive, and it has limited editions so that women can easily spot such a POS in sight and attach a price tag to it, feeling competitive against each other. Even so, I still think LV should come out with a more tasteful, distinctive-looking vinyl bag that at least doesn't embarrass the buyer.

Here’s one thing that pisses me off royally. Newspapers and their bend-over stance with realtors and lending agencies. It can easily be explained via basic marketing tactics. For example, my local Newspaper, the Alameda Sun is heavily funded by several large real estate companies. The real estate section is actually the largest chunk of the paper, and the articles are written mostly by real estate agents. Naturally, there's hardly a negative word of caution ever mentioned. One recent article featured a college grad who wondered when he should "get in" to start real estate investment. The reply was from yet another agent who said to " do it at all costs". Yet another article was written about the history of Alameda real estate, and how that the creation of a new shopping center( with a new Target) along with the immigration of wealthy Asians will assure that housing prices will be maintained for years to come. What total absurdity. Flip to the real estate for sale section, and the agents cleverly list all the homes with "sale pending" and SOLD! Of course the desire is to create an artificial image of housing being sold like no tomorrow and instill a sense of panic in people who believe the hogwash the papers, media, and agents publish like yellow journalism.
I’ve actually written to the Alameda Sun several times, along with several other publications informing them of their total bias and willful ignorance on the matter. To me, this kind of controlled information is what mislead so many people to start with, and now that it’s far too late to stop it, they’ll ride it on out in Enron flourishment fashion. I have no doubt that at the end of this, there will be a lot of people going to jail, and perhaps once again, Americans will learn the value of the dollar.

Nomad
Well said. This is why I'm drawn to this site. The outrage.

I don’t think these camps break down easily by income levels, religious convictions, race, ethnicity, gender, or education level. We can see from these many posts that we have Republicans, Democrats, Liberals, Conservatives, Rich, Poor, Over-educated, Undereducated, Self-educated, Devout Religious, Atheists, and even Anarchists; yet for some reason we’ve all come to the same conclusion about this mega-bubble. This could be an entire thread itself.

Very well said, Randy.

Would it be accurate to say that I am “bearish” on sliding down a bannister full of razor blades? Why? Is there a right way to do it? So when it comes to drunk driving, bungee jumping over pungee sticks and hang gliding in a missle testing range I should be considered bearish on these “activities”? There’s bullish and then there’s just plain wreckless.

Now, DinOR, there you go again hating Amerika... ;-)

A good deal is a good deal and a bad deal is a deal that was not negotiated correctly.

Ummm... geee, thanks for those sage words of wisdom, "REO Mentor", did you think of that by yourself?

If you purchase an investment property that provides positive cash flow at the end of the month and you have the right type of loan, why would you pass that up?

Sounds great. Show me how purchasing anything at today's prices in Bubble states like California will generate positive cash flow, and sign me up, buddy! And I'm not talking about basing your "cash flow" on the temporary "teaser rate" on a neg-am loan. I mean a real, amortizing mortgage at prevailing interest rates.

Followed your link to sales pitches for "Nouveau Riche". Thanks for the Ponzi/pyramid/multi-level-marketing get-rich-quick "investment opportunity". I wish you lots 'o luck with that.

@TN,

Those are some good suggestions. Another alternative might be to peg the HaHa directly to the CPI, PPP, GDP deflator or some other less politically-manipulated inflation index. I understand from reliable sources* that the Iranians have recently announced they're considered pegging their oil bourse to the HaHa. This would really give the HaHa a huge boost in the international finance markets.

*"reliable sources" = complete fabrication

TN, thanks for the wise economic correction for our base unit of measure, the HaHa.

For current purposes, 1HaHa = USD 150,000.

The precise definition of 1HaHa is 3x National median family income*, for which HaHa (after which the unit of measure is named) stands as a reasonable substitute. Therefore, we may peg the unit of 1HaHa to HaHa himself so long as:

1) HaHa remains in the state of California; preferably in the San Francisco Bay Area;
2) HaHa's family median income remains within alpha=.05 of the predicted Bay Area median income level;
3) HaHa is still living.

At such time as HaHa becomes disqualified, the base formula may be still used to determine the HaHa unit of measure or a more suitable peg may be established which captures the spirit and intent of the measure.**

*Note that 1HaHa is a relative measure vis-a-vis National median family income compared to SFBA median family income. Therefore, the 3x multiplier will also be a dynamic variable in this system of measure.

**It is for the reasons of this inherit complexity that we prefer to us the HaHa measure as shortcut nomenclature when discussing real-estate issues on this blog. It's also funny.

Peter P will shortly be disclosing plans to create a CME traded HaHa hedging instrument.* HaHa-hedges should swiftly gain popularity among mutual fund managers, hedge fund managers, pension fund managers, and individual investors as a way to protect against or directionally bet on real-estate armageddon.

*The alpha for confidence that this prediction actually occurs is .9999

From info found on this site, it helped me make a decision to leave behind SF and move to another state with a much lower cost of living.

May I ask which state? (hoping to get out of dodge myself)

And, on the article… I really do believe it makes sense to own long term than rent long term.

Generally speaking I would agree with this sentiment, with one major exception: buying into a speculative asset bubble, when housing prices are not supported by economic fundamentals and cash-flow (i.e., rents & incomes).

Seize the day I say, and live life to the fullest.

Can't argue with that, except to disagree with the implicit assumption that mortgage "ownership" = happiness. I believe I can "seize the day" and live life to the fullest without making crushing mortgage payments, thank you very much. Naturally, I plan to own someday, either when I: (a) move to a non-bubble market, or (b) prices re-align with economic fundamentals / mean-revert.

If you want to hate me because I figured out how to make money regardless of what the market does then go ahead. Finding a reason to hate me is easy, but realizing that I am not your enemy or problem is difficult.

"Don't hate me because I'm [beautiful, rich, popular, etc._______]"
:lol:

@REO Mentor,

SLC aside, if you can find a cash-flow positive investment opportunity here in Bubble-ville Central (aka California), I say more power to ya'.
No one here "hates" you for being a playa/RE pimp. We just prefer to stick to RE/economic discussions and leave out the slick sales pitches. Thanks for stopping by, though.

Hokies,

you are really wasting your time here, you are not going to convert one person using your line of reasoning. You think it is easy to change the way people think on the internet? No, people come out here to confirm what they already believe in, so here is the bear site, we are trying to figure out how to make more Hahas as the market implode, not from RE. What we are more interested in is how to profit from it. If you have something to say in that regard, speak now. Or just get lost.

I’m saying don’t let the high housing prices deter him/you guys from living a comfortable lifestyle... Don’t let high home prices negatively affect people’s lives.

I/we aren't. One great side effect of the bubble is that it's made renting an incredible bargain, and there's tons of vacant specuvestor-owned property out there to be rented.

I am not convinced that housing is a ’speculative asset bubble.’ Yes, prices have gone up tremendously, and could come down 10-20% on case by case basis. But, I just think there’s much more wealth out there than anybody can imagine. Economy is booming, there’s wage inflation, the 10-yr is still at 4.7%. How on earth is the housing market going to implode?

Oh where to begin debunking...? Debt = wealth? Wage inflation??

On second thought, I really don't have the time or inclination to debunk every erroneous claim made by every newb RE bull who shows up here. Thus, I recommend mining the archives for the enlightenment you so desperately need, grasshopper.

Why is living in a 1200sf 1br apt. not living life to the fullest? All the time you save not having to clean a huge house and doing yard work allows you to live life to its fullest (unless cleaning and yardwork is your thing).

I fully agree with Hokies. There is a limit to what you want to save. Dont forget that life can be short or can be waaaay too long. It is not in your hands and it will never be. Enjoy it in the right way and slumming it in a 1 bd apt on a 300K salary is a little extreme in my opinion.

Thanks HARM. Do let me know when the real estate #’s start going negative YoY. I think the last DQNEWS.com article says we went up 12.2% YoY for Feb 2006. Maybe it will happen end of the year, maybe not.

It will be my distinct pleasure, sir! ;-)

We're all well aware that the CA statewide YoY numbers are still positive (though a few areas are already negative). Or, as John Karevoll likes to say "Indications of market distress are still largely absent".

And, as many a sports broadcaster says, "it ain't over till the fat lady sings". Regulars here know that the RE market is very "sticky" and moves slowly compared to other asset classes. Ripple effects caused by changes to mortgage liquidity, interest rates, appreciation, buyer/investor sentiment, etc. can take years to fully wind their way throughout the markets. Most of us expect the crash to play out very slowly over several years, before prices hit bottom and rebound.

I do agree if it is a large one bd apt with a great view and you dont want anyone living with you or coming to visit you for a weekend. To each their own.

And, on the article… I really do believe it makes sense to own long term than rent long term. That’s just a given.

Based upon exactly what do you make this claim? The NAR's own data shows that one would have historically done marginally better to have rented and invested the rent-to-PITI difference in an equity index. Do you have some exclusive insight into the future which allows you to know *for a given* that this will not be true over the next 40 years as it was over the past 40 years?*

The decision to rent or own is, and should be, primarily a *qualitative* choice, not a quantitative financial choice.

*For primary residential decisions; not rental income/investment property.

It’s not worth killing yourself by saving an extra $5-6K a year, especially if you’re earning that much and have already 300K saved.

I would not presume to be so bold as to know what is best for other people's life choices and decisions. Perhaps some are happiest by leveraging themselves into bankruptcy; others may derive pleasure from being frugal.

patseajul Says:

"Why is living in a 1200sf 1br apt. not living life to the fullest?"

Just a FYI for those not in the apartment business and familiar with apartment square footage.

1,200 sf is more than twice the size of the average 1br apartment in San Francisco and is bigger than my 3 br San Francisco flat.

1,200 sf is also bigger than the average US single family home prior to the mid 50's

SF Woman,

I don't claim to be an expert in securities litigation but the lawsuits you refer to have been in the works since the last bubble. Stock market that is. However, it's impact will not be lost on the RE/Lender crowd. The precedent (while not perfect) has a natural tendency to support an environment of caveat emptor.

Phil,

Fred Meyer, the founder of the grocery chain of the same name lived his entire life in a 1 bd. apt. He was a multi-millionaire. It has been said that he enjoyed being a retail grocer that much.

Unlike the popular myth, bottom feeding with REO/Foreclosures is not easy money. It just so happens there are ALOT of bottom feeders out there. I've been around investors my entire adulthood and I've yet to meet anyone that has made it big flipping foreclosures. Our friend is very careful not to use the word FLIPPING b/c it already has well earned negative connotations and he knows this. If banks are letting these properties go for 40% below market value, you don't want them.

Hokies Says:

March 21st, 2006 at 5:55 pm
Hey Guys,

I was really just saying how i feel about that one 35 year old guy, who is making 220K combined, with 300K in cash living in a $1,200/sqft one bedroom.

Oops, again! Mis-read.

Hokies,

We're renting in a very desirable part of Mill Valley, 3250sqft, 4BR/3BA+office. Guess the rent. $1200/mo for 1200sqft is significantly more expensive per sqft than we're paying. You wonder why people who can easily afford to buy chose to rent?* There's your answer.

*Yes, we fall in this category. HaHas aren't our problem; a disgustingly insane real-estate bubble is.

Whether Hokies / REO Mentor et al are trolls or not, I enjoyed reading their arguments. It's important to doubt and double check my arguments, and such posts force me to do that.

And I am still happy to be renting right now. A part of me still laments the fact that I did not buy 3-4 years ago, but that does not mean I need to buy NOW !

As far leaving life fully, of course ! I see how better my quality of life is compared to folks who bought 1 year or even 2 years ago. Of all my homedebtor friends, I am the only one who has taken multiple vacations in the same time period. Have bought all the toys I actually use and enjoy, and in general have significantly upgraded my life in the same time span.

And, I do sleep well at night. Have very little to worry about. This realization is very recent. I sense a change in psychology in last few days. I have seen fear in peoples' eyes, about the burst. To them, the mere thought was painful and troubling. People didn't even deny vehemently - as they used to. And no one knows that I am RE bear. To them, I am just afraid of taking so much loan (which is true).

Life is so much more than living in a McMansion.

Like my Dad always said'Having money in the bank with no debt is like NOT having a toothache.'
In other words having $ is fine and good, but not having$ and/or having debt HURTS LIKE HELL>

REO Mentor Says:

"Ladies and Gentlemen: I am a fulltime real estate investor and proud of it. I buy houses from banks at 40% to 60% below market value..."

Yawn...

"The market will drop and when it does I will still make money on my properties and will probably pick up some rentals in California. If you want to hate me because I figured out how to make money regardless of what the market does then go ahead."

OK. I hate your greedy, Boomer ass for f-cking it up for everyone else.

"I almost forgot: Rental properties can have positive cash flow with a fully amortized 30 year mortgage. Try Salt Lake City in Utah. Homes are still affordable and rents are high."

Thanks for remembering.

"Those of you selling fear about owning real estate: Are you Stock Brokers hoping people keep their money in Stocks and pay you commission or Real Estate Investors trying to keep the competition low."

No. Neither am I an Ivy Leaguer. I'm just a hapless State-school guy with a worthless MBA, caught between off-shoring and a hard place, that had to migrate like a fish out of water to the hot deserts of Phoenix, Arizona because Cali has become hopelessly unaffordable.

"This is a great nation and money can be made and lost in many ways. Pick your medicine and take it." --REO Mentor

Don't you mean pick your doobie and smoke it?

--Michael Holliday: One-man Circus in the Theater of the Absurd

Maybe Surfer-X, has some input into Mr. Successful, Gordon Gecko II and his hyper-equity real estate antics...

Ha Ha Says:

A native of Puerto Rico, she and her husband, from El Salvador, bought a $342,000 home in the city’s East Boston neighborhood in 2002. They could manage the mortgage. But then unexpected taxes in their contract pushed up their monthly payments — twice in a single year.

Last June, her husband lost his job as a chef.

Story continued...

Her husband unfortunately lost his job as a short order pastry chef, but the hotel in which he worked lucked out: Michael Holliday showed up with a BS in International Business and an MBA on his resume, making him suitably qualified in the new, global economy to make $8 an hour cooking up the finest short-order pastries west of the Mississippi.

Micheal Holliday can make a mean cream puff pastry!

Join him tonight for an experience of fine dining!

To BA Or Not To BA Says:

Whether Hokies / REO Mentor et al are trolls or not, I enjoyed reading their arguments. It’s important to doubt and double check my arguments, and such posts force me to do that.

Well, I can certainly see your reasoning here --assuming that Hokies / REO Mentor were actually "honest bulls". Problem is, given the snide, condescending "jealous bitter renter" tone, the casual disdain for facts, careless assumptions and REO's cheesy sales pitch, I'm guessing they're NOT honest bloggers* in search of enlightenment.

*I could be wrong about Hokie --he may just be a legitimately bullish individual (albeit misinformed). My apologies if this is so.

Can someone please explain what BB means by this ?

From
http://news.yahoo.com/s/nm/20060321/bs_nm/economy_bernanke_housing_dc

This increase in mortgage debt may not be a particularly serious problem. First, there has been on the other side of the balance sheet, significant increases in assets, so that balance sheets in general are looking stronger," he said.

So taking more debt is not a problem because house prices have appreciated ? Does the debt reduce automatically with the decline of asset values ? I don't think so ;-)

If all he means is that debt has been taken against assets, then, yeah, big deal, thanks for explaining. I know people who had taken loan against their inflated stocks before the dot com bust. Their balance sheets also had assets on other side. Didn't help them at all. Actually that did not turn out to be a very smart idea.

I found out about this site by googling "housing bubble" in early summer 2005. It was one of the first two or three sites that popped up.

I kind of like how the blog transcends the Bay Area but stays rooted in California, with "news" from all over the place. It sets this blog apart from sites that try to be local to all the locales.

In fact, Patrick.net seems a much better blog than anything closer by in Vancouver...

I have one other ulterior motive for keeping an eye out here, besides arguing social policy and writing rambling discources, which is that I fully expect a big blow up in the real estate market in the US, followed by similar problems in Canada after some lag time - so Patrick.net is my "canary in a coal mine". When the birds stop singing in Cali, that's my time to start thinking about buying.

I'm using Patrick.net as a kind of early warning system in that regard.

BTW, rent a 1300 sf townhouse for about $850 American in downtown Victoria. If I bought something similar, the mortgage would be more like $1700 per month (25 year amortization, 5 year term, 6%). I don't mind an ownership premium, but not that much!

I earn the exact median household income in the local area, which is not close to a HaHa.

Apparently median priced housing in Victoria is now only affordable to 10% of the local polulation.

Favourite posters would have to include Surfer-X and SeattleDude. Really!

etc etc etc

Cheers,

tsusiat

From Randy H -

"Without sounding alarmist, we should probably begin to thicken our collective skins, at least just a bit, as those who stand to lose the most from the correction begin to lash out at communities like ours."

Back on topic,

I guess the beauty is that there is freedom of speech. If the market in Real Estate experiences a bubble meeting a pin, certainly anyone can lash out at Patrick.net, but none of us has any responsibility for the macroeconomic events of the day based on observing events then participating here.

Buyers and sellers will determine that, and if a bunch of crybaby sellers start showing up and whining about their finanical problems in the future, all I can say is they weren't whining earlier; the same people were probably gloating.

Peace,

tsusiat

New thread: Housing Price Rules-of-Thumb

Consumption in US is driven by women. Many men in this country -- I would say the majority of men -- are of the insecure type. They HAVE to slave all their lives to "purchase" a wife who in return sucks everything (soul, true aspiration, spiritual well being, self respect) out of her husband. The enslaved husband thinks he's got a good deal. But in actually, he just signed all his life over to servitude.

I suspect that except the flippers, most men buy the houses against their sane judgement due to the pressure of their women. As pointed out by someone earlier in this thread, women DO compete with each other in the superficial department: my diamond is shinier than yours, my hubby makes more money than yours, my house is bigger and newer than yours.

Only the secure types (true upper class and bachelors by choice) can escape this madness.

Tsusiat:

Vancouver and now Victoria are outrageously expensive considering how much more limited the local economies are compared to Toronto, Montreal, and heck even Calgary. It's part geographical (Vancouver), part west-coast-immigrant money, but if Shanghai real estate can crash there's no reason to think that Vancouver won't get a correction. My guess is 2008, when the Olympics have come and gone. Toronto probably sooner.

There aren't that many two-income doctor families to buy expensive real estate anywhere. It's just easy money. Did you read that some financial institution is going to introduce the 35-year mortgage in Canada? Make me gag! I already dislike the idea of spending 25 years of my life making payments, nevermind 35!

TOLurker

44 yo lifelong S.J. resident, homeowner, survivor for more than two decades in "the trenches"of tech. Purchased in 1989 and rode it out. It kills me to see other locals making the same mistakes. But I'm afraid it will be a lot worse for them. See, in 1989, I also bought with an ARM. After the 6 mo teaser "reset", the interest rate on that adjustable went DOWN every single adjustment for years, during the "last Bush recession" of the early 90's. This is the reason, the ONLY reason, that I could refi in 1994 even though I'd lost equity in the bursting of the bubble, because the lower interest payments from the dropping rates allowed me to accelerate principal payment. Fiendish saving helped too. (I was 39 y/o before I'd ever purchased a car that wasn't at least 10 years old). Yes, the 1989 bubble burst during a time of FALLING INTEREST RATES. Oh yeah, and that time, 1989 to the mid 1990's, tech employment was relatively robust compared to now, and also, there was no outsourcing. Folks with IT skills ruled the day. (So the steady paychecks helped).

To quote the bulls, "this time it's different".