patrick.net

Central part of Fremont

Sorry, I'm only familiar with Oakland and to the north. Wish I could help, but I just don't have occasion to frequent the area. Again, sorry.

If you are planning on having kids I know that Fremont has a great school district. Be mindful of what you buy and the amount of space you have. Situations change as you go through different stages of life. I have been in my current condo for 4 years and we are still trying to figure out how to leave because it's just way too small and we are underwater. I wouldn't buy anything unless you plan on living in it for 10 to 15 years. Housing values will probably still continue to drop for a few years. Wait it out and save your cash if this is not something you want to live in long term.

Richmond says

Sorry, I’m only familiar with Oakland and to the north. Wish I could help, but I just don’t have occasion to frequent the area. Again, sorry.

No worries!

Condohelp says

If you are planning on having kids I know that Fremont has a great school district. Be mindful of what you buy and the amount of space you have. Situations change as you go through different stages of life. I have been in my current condo for 4 years and we are still trying to figure out how to leave because it’s just way too small and we are underwater. I wouldn’t buy anything unless you plan on living in it for 10 to 15 years. Housing values will probably still continue to drop for a few years. Wait it out and save your cash if this is not something you want to live in long term.

oh boy. A lot of my friends bought a home this past year. They are expecting prices to rise.

Is it a good time to buy depends at least as much on your personal circumstances, and your own what if's, then on exact timing of the markets, interest rates, etc.

There are some purchases that are freakin' stupid in any circumstance, say, like buying a MacMansion tract home in somewhere like Los Banos or Elk Grove when you have to commute to a job in the Bay Area to make it all doable.

Nomograph says

Patrick seems to ignore rent increases and inflation for some reason.

I can only speak to my circumstances, but I'm paying 1495/mo. now for the same apartment in Mt. View I was paying 1395/mo. for in 1997. Pretty sure it's cheaper now after inflation (not that it's cheap, mind you, though with the $%&! neighbor kids playing Marco Polo for hours/day in the summers sometimes they should be paying *me* to be here).

oddhack says

Nomograph says

Patrick seems to ignore rent increases and inflation for some reason.

I can only speak to my circumstances, but I’m paying 1495/mo. now for the same apartment in Mt. View I was paying 1395/mo. for in 1997. Pretty sure it’s cheaper now after inflation (not that it’s cheap, mind you, though with the $%&! neighbor kids playing Marco Polo for hours/day in the summers sometimes they should be paying *me* to be here).

The good thing about renting is that you can go to the leasing office and make a complaint about the kids. They will most likely do something about it. You shouldn't have to suffer so much in your own home. If you owned your home, you would have to go speak to their parents instead. I think it's much easier to let the leasing office deal with it. One of the benefits of renting.

The other great thing about renting, is you can move when other people's lives become too real for you. You're not pestered with the whole idea of belonging to a community, because it's all about you.

There is still a lot of volatility in the economy so no one has any reasonable idea where things will be in six to 12 months. For me personally it would be difficult to make a purchasing decision at this point unless I was locked into a rock steady job, had a stable family family situation and had absolutely no desire to liquidate my investment within the next 5 to 10 years.

Just my 2 cents...

I am looking to purchase in palm beach, FL. I think between now and the next 6 months (most likely fall 2010) will be a great combination of low prices and low interest rates.

We stopped trying to overanalyze things and just went with what we felt we could afford even if things get a little worse in the economy. In most parts of Fremont, prices have fallen quite a bit already. The chances of another 50% decline from here are pretty slim for that area. So if prices fall a little bit, it's unfortunate but not the end of the world. The chances of buying at the exact bottom are pretty slim.

oddhack says

Nomograph says

Patrick seems to ignore rent increases and inflation for some reason.

I can only speak to my circumstances, but I’m paying 1495/mo. now for the same apartment in Mt. View I was paying 1395/mo. for in 1997. Pretty sure it’s cheaper now after inflation (not that it’s cheap, mind you, though with the $%&! neighbor kids playing Marco Polo for hours/day in the summers sometimes they should be paying *me* to be here).

that sounds like a case of getting what you pay for. It's cheapness probably attracts all sorts of elements.

5 years I would buy a house. Even in a crappy neighborhood a house at least insulates you to some extent.

palmbeach says

I am looking to purchase in palm beach, FL. I think between now and the next 6 months (most likely fall 2010) will be a great combination of low prices and low interest rates.

The Florida coast MIGHT be in danger due to the oil spill. There are extremely toxic chemicals in the oil (corexit, etc.) that will probably lead to mass evacuations. Yes, property along the Gulf coast may be extremely cheap! If you don't believe me, go on youtube and search for "oil spill corexit mass evacuation". I am not sure if it will happen for sure but I think it's a good probability.

When the user name is HousingBoom, posts=1 and comments=6 I cannot help thinking that we may have a RealTroll(TM) on our hands.

HousingBoom sounds halfway earnest and reasonable, but how does one know?

HousingBoom says

Is it a good time to buy now?

Newp.

You're welcome.

mthom says

We stopped trying to overanalyze things and just went with what we felt we could afford even if things get a little worse in the economy. In most parts of Fremont, prices have fallen quite a bit already. The chances of another 50% decline from here are pretty slim for that area. So if prices fall a little bit, it’s unfortunate but not the end of the world. The chances of buying at the exact bottom are pretty slim.

My wife is excited about buying so I will probably make the purchase if the price is right. If prices fall, I doubt it will be that bad. Thanks everyone!!!

justme says

HousingBoom sounds halfway earnest and reasonable, but how does one know?

Good point. You never know. Take ellie "I never, ever insult anyone" mae for example. She says she never insults anyone. She says she doesn't hate. She sounds, like you said, halfway earnest. The problem is the other half of her halfway. I guess that makes her a troll, or less, like a half troll. At least HousingBoom sounds halfway intelligent.

justme says

When the user name is HousingBoom, posts=1 and comments=6 I cannot help thinking that we may have a RealTroll(TM) on our hands.
HousingBoom sounds halfway earnest and reasonable, but how does one know?

Just curious but for what reasons would I want to join this forum just to be a troll?

HousingBoom says

If prices fall, I doubt it will be that bad.

Depends in which neighborhood and which tier.

50% drop? Not likely in a few neighborhoods.

Nomograph says

Patrick seems to ignore rent increases and inflation for some reason. Most of the other stuff is worth considering though.

Actually, Patrick doesn't ignore inflation. It is implicitly built into the capitalization rates he suggests. For example, if your annual rent is $24,000, your discount rate is 9%, and your assumed inflation rate is 3%, you will end up with a 6% capitalization rate. 24,0000/.06=400,000 which means you would be at rental parity in a $400,000 house that rents for $2000 per month. The discount rate should capture the risk and opportunity costs involved and may be different for different individuals.

Crazy man - What neighborhood(s) do you expect a 50% drop from today's prices?

The mistake I made was commenting on the 50% OFF TODAY'S PRICES while thinking 50% OFF OF PEAK.

So 50% off of peak? Every area E-man mentioned. Easily. Especially considering many of those areas went up 200%+.

50% off from here? Depends on which area/tier, if our economy actually recovers, what happens with deflation/inflation (and wage inflation/deflation) and what equivalent rents end up being.

Currently where I live, rents are 25-35% off of purchase price, so I expect at least another 20-30% decline and that's if we actually get back to 4/5% unemployment.

The current prices aren't even supported by a good economy, let alone the current train wreck we have now.

Crazy man, do you follow any particular houses or areas as far as sales go? In my area of Cupertino, houses generally last a week before they sell. I don't see how there's going to be much of a drop if that's the case. Saratoga and Los Altos are pretty similar - as long as things aren't priced incorrectly for the current market, the houses go fast.

I follow the Campbell area since that's where I'm interested in buying.

Current sales are largely irrelevant to me, as IMO those people are chasing the market down. I see more price reductions than anything else.

I think the lower tier houses in most areas is probably at or near a bottom, as the rent/buy ratio is much more sane. Excluding any extreme economic anomalies (massive deflation, massive unemployment) it seems those areas are probably a reasonable place to be buying.

The mid-high is much more obviously inflated. I currently rent a 3 bedroom corner lot house in Campbell that sold in the 600K range for 1800 a month. Granted it should rent for 2K, but even then it's not even close. Clearly some leveling needs to happen. I honestly don't see wage inflation covering that gap, so the logical conclusion is that prices need to continue to drop. IMO continue it will.

Many areas in the BA are very much like this, though I think it's a fair argument that some places really don't conform to certain economic forces. Atherton certainly, and *maybe* PA and LG. The others are fair game IMO, there's just nothing special about them.

Keep in mind that I do also currently own and I own it outright, so I have just as much to lose as I do to gain.

We'll know more in 2013 IMO. I'll keep looking, but unless I come across something that I think is a fair value, I'll just continue to happily rent.

crazyman

In places where there are few rentals and everyone owns their house, prices are set by people with tax deductions (which are much greater as income goes up). There is a major difference in income tax subsidy between a home in Cupertino then Vallejo. This is a major reason why the bears are convinced Penninsula housing is about to drop 50% when it its fairly close. (perhaps 10% overvalued on the own side)

In any case, talked to my lending agent as I wanted to refinance two homes, one is in San Francisco and one is in Hercules. In SF, they wanted 80% loan to value ratio while in Hercules, they wanted 70% loan to value ratio for the same prime rate, which means the bank view the SF property as less risky even though the price dropped just 20% from peak vs 50% off peak for the Hercules property. That bias has been around since 2008.

HousingBoom says

oh boy. A lot of my friends bought a home this past year. They are expecting prices to rise.

Wishful thoughts. I too have friends who bought at central part of Fremont and they are underwater now. When they bought their homes 3-4 years back, their strategy was: "I will live here for 4-5 years, build some equity and move to Mission district (or Forest Park) before my child starts going to school". Well, they are underwater and they can't sell their homes. Now, as they cannot move to Mission district, they are seriously thinking about sending their kids to private schools.

Boom,

>>Just curious but for what reasons would I want to join this forum just to be a troll?

There are thousands of frustrated Realtors out there that are willing to do just about anything to get the bubble started again. And that includes spending copious amounts of time on teh internets sowing seeds of doubt, posing as wannabe buyers, and so on.

They know they cannot go out and say, "hey, I'm a realtor, and prices will start to rise now. Why, because I say so!"

Instead they pose as buyers, doubters and so on. The general principles of being a shill are followed.

Who's the real troll on this thread? Please stop harassing new members who are only asking for advice.

>>Who’s the real troll on this thread? Please stop harassing new members who are only asking for advice.

You asked me the question why anyone would join the forum just to be a troll, and I answered in general terms. There is no particular need to be sore about it.

justme says

>>Who’s the real troll on this thread? Please stop harassing new members who are only asking for advice.
You asked me the question why anyone would join the forum just to be a troll, and I answered in general terms. There is no particular need to be sore about it.

Troll

Nomograph says

My advice is take advice with a grain of salt. The stuff on the home page of this website is mostly nonsense when it comes to rent vs. buy costs. In desirable areas near employment centers, it almost ALWAYS cost more to buy in the short term, and it almost ALWAYS cost a great deal more to rent in the long term.
Patrick seems to ignore rent increases and inflation for some reason. Most of the other stuff is worth considering though.

Inflation is not a constant.

There is no reason today why wages and bread could not cost the same amount now as they did in 1932, other than the preconceived notion that there's set percent that prices and wages must inflate. It is purely a numbers game and not based on a scientific law. Other than Accounting rules for projections and speculation.

Supply and demand has more effect on inflation, than time does.

If something cost 5 cents in 1930 and it now costs 50 dollars in 2010, the only thing that dictated the value increase was what people were willing to pay.
Where and when the prices rose had more to do with extenuating circumstances than time.
And because it's 50 dollars now, there's no reason whey the said widget wasn't $175 at one point in the 70's.
Where's the cries for deflation adjustments where called for, to offset times when there was no inflation, and certainly we had almost a decade of Stagflation, where's the variable for that in the "Inflation adjustment" figures?

I cringe when people want to adjust for inflation on historic financial data.

Sure one compare what the same money would have bought in other times, for a widget, but that doesn't change or effect the numbers.

I think other factors are more important that inflation adjustments, such as the quantifying groups that could afford the values in those historical ranges.

Like the amount of people that had access to the means to procure a loan for house in the 40's, 50's, 60's, 70's. The percentage of middle class families that could own a home, rose. As did the demand on those homes, as the prices inflated. Sure you could average it out, but you would have to average for each year going forward. That's hardly constant.

10-ounce,

I have been measuring prices in hours of median American wage. By that measure, we don't have inflation for all the wonderful stuff (junk) we get from China, nor for FrankenFood obtainable now with all the great economies of scale in chemical agriculture these days.

But for other stuff like medical services and tuition, we have to work more hours.

You can call it whatever you want, inflation or deflation. I call it a declining standard of living.

Economics are like a board game.
The classic accounting rules, and prudent money management would be the game of Monopoly.
Now recent financial policy has been a whole different game. For the last decade and half the game has been Five Card Stud high stakes poker.

So trying to inject classic accounting rules like inflation adjustment, is like handing a homeowner that over bought in the bubble a community chest card that reads, "Go Directly to Jail, don't pass go, and don't collect two hundred dollars."
To which the card wielding homeowner slams down his hand and says... "But I've got a Royal Flush!"

Next year it will be Shoots and Ladders, or Aggravation.

Patrick says-

The only true sign of a bottom is a price low enough so that you could rent out the house and make a profit. Then you'll know it's safe to buy for yourself because then rent could cover the mortgage and all expenses if necessary, eliminating most of your risk. The basic buying safety rule is to divide annual rent by the purchase price for the house:

annual rent / purchase price = 3% means do not buy
annual rent / purchase price = 6% means borderline
annual rent / purchase price = 9% means ok to buy

Do the math. I did and I am renting in the Niles area Fremont

justme says

When the user name is HousingBoom, posts=1 and comments=6 I cannot help thinking that we may have a RealTroll(TM) on our hands.
HousingBoom sounds halfway earnest and reasonable, but how does one know?

What's a real troll?

mthom says

Crazy man, do you follow any particular houses or areas as far as sales go? In my area of Cupertino, houses generally last a week before they sell. I don’t see how there’s going to be much of a drop if that’s the case. Saratoga and Los Altos are pretty similar - as long as things aren’t priced incorrectly for the current market, the houses go fast.

I think home prices will go down in these areas, but will still be pretty expensive. These are the only good school districts in the southbay, peninsula and mid peninsula regions. People flcok to good schools. Some people will buy with extended families just to get into the cupertino schools.

Tenouncetrout says

Economics are like a board game.
The classic accounting rules, and prudent money management would be the game of Monopoly.
Now recent financial policy has been a whole different game. For the last decade and half the game has been Five Card Stud high stakes poker.
So trying to inject classic accounting rules like inflation adjustment, is like handing a homeowner that over bought in the bubble a community chest card that reads, “Go Directly to Jail, don’t pass go, and don’t collect two hundred dollars.”
To which the card wielding homeowner slams down his hand and says… “But I’ve got a Royal Flush!”
Next year it will be Shoots and Ladders, or Aggravation.

I like it!!!

Condohelp, RealTroll(TM) is a pun I made on Realtor(TM).

Shorthand for Realtor Troll.