patrick.net

Jack says:
"If you are playing it safe, it might be the best investment location wise, but if you are looking for the most percentage of appreciation, perhaps a less expensive neighborhood somewhere else in the Bay Area might make more of a jump, since Marin is already so high."

Well, I presented this example because it's the most out-of-control property I've seen to date in Marin, a possible case study for the topic at hand. Including taxes, that property is about $4600/month--for a 1000sqft hovel. In terms of an investment, I cannot honestly regard that property as one,--no more than a Thomas Kinkade painting sold at 100X value can be considered one. At this point, I don't consider any property in the bay area a "solid investment". While we do own property here and silicon valley, thankfully none of that's leveraged to the point of great risk.

By contrast, I've been scanning my home region, Puget Sound, and there's a number of attractive properties (real homes) within a Seattle commute for a fraction of that San Anselmo bungalo. But guess what--I'm even wary to buy there, since I suspect the same dynamic is underway. So my inclination is not to buy--but sell off/rent.

@AntiTroll from Oz,

Don't know about other countries, but not in the U.S. anymore. Nixon took us off the gold standard back in 1971.

General background on the gold standard & Bretton Woods agreement: tinyurl.com/cm6qw

Don’t know about other countries, but not in the U.S. anymore. Nixon took us off the gold standard back in 1971.

Maybe the banks have us on a new standard, the "Debt standard"

AntiTroll from Oz, I think the land of expensive watches still has a significant gold reserve.

Maybe the banks have us on a new standard, the “Debt standard”

It wouldn't surprise me if that's the actual name for it. :-)

AntiTroll from Oz, I think the land of expensive watches still has a significant gold reserve.

Issue maybe is who owns the gold. Is it the FED, government, or privately held?

Looks like the Swiss Central Bank is selling gold though...

http://tinyurl.com/c3ogb

I was trying to answer your question about the relative strenth of Marin County compared to the rest of the Bay Area, all other things being considered equal...The bungalow is priced based on wishful thinking. Watch it sit

Agreed, I think some areas of Marin have innate desirability (such as Ross, Kentfield, etc.), while others to a casual visitor look pretty much like middle-road housing--w/ working-class infrastructure (poor roads, above-ground electrical). Perhaps the desirable areas will carry the less to a degree during a correction. In any case, it will sure be interesting to see where all this leads!

There is a cool new rent-vs-buy calculator at CEPR:

http://tinyurl.com/cubol

For a 600K house in San Jose with 20% down using a 30YR FRM, it says:

Your basic costs start at $ 3,200 per month. However, if you can rent a similar home for less than $ 4,200 per month, you may be better off renting.

A 600K home can easily be rented for 1700 or less... Enough said.

I forgot to add, one assumption is selling the house in 10 years.

Just to add, CEPR appears to be quite optimistic about the probable depreciation. It only estimated a (real) decline of 49% for the San Jose-Santa Clara-Sunnyvale region.

Uh oh...more houses?

Court ruling clears way for 73 new houses
CLOSELY WATCHED CASE CLEARS WAY FOR BUILDING 73 HOUSES
By Ken McLaughlin, Mercury News
In a case watched by environmentalists around the state, a Monterey County judge Tuesday ruled that a 1907 map permitting 73 new houses on prime farmland is as legal today as it was nearly a century ago.

You guys ready for a new thread yet?

Re sauce: I vote no ban. Dude's clearly a chump, but I like watching him pretend to be a playa, kiddie punctuation and all...

u r all such 100z0rz!

_shrug_

Cheers,
prat

How about "Malibu Madness"? Just posted.

Jack-
Just as an fyi of Marin house prices, you might find this interesting:
I've compiled median home figures from '93-05, as shown here..
I've extended the '93-99 trend to '05, if that suggests anything.

It appears I've bungled the link mentioned above, which can be found here:
http://auth.mhhe.com/wmg/flashcomps/images/marintrend9305.jpg

Now you wouldnt by any chance be suggesting that the green line is where prices “should be” right now are you?

If prices do not return to their long-term trendline, it would be a new paradigm indeed. Where is my hover-car?

Jack, I did not say anything about the green line. :) It may or may not represent the (long-term trendline".

I would not recommend you to sell. It is a nice comfortable home after all.

Forgot to add...

Not investment advice.

"I am sure Kurt S will even agree that the green line in no way represents a “long term trend”! What, only 5 years, and two of them were appreciating when the rest of the market was still going down! (Hover car?) "

Yeah...that's a short span to calculate a "trend"--but only because I couldn't find stats prior to '93. When I have those, I'll figure them in.
And, of course, I don't suggest Marin housing should toe that green line, but it's certainly interesting to see how the slope changes, particularly during that timeframe. Alarm bells went off when I saw this--had to share.

Regarding selling--we've seriously considered it. As we could sell things and move back N. to Seattle and live quite nicely; that option has been spinning in our heads. But there's the job thing, family in Marin, and that's stopping us (for now).

Peter, Peter P...

Can we agree to sign/address by screen name only?

Of course, we can always pull a Netrugu and change name. ;)

"And I am sure you know as well as anyone that ’statistics can be morphed”
(or if not morphed, at least that green line’s path can be changed by starting it wherever you like!) I thought it was curious and somewhat arbitrary that the green line started in the third year ...etc. "

Take this all as a bit of fun! Since the data appears rather linear, I simply drew a line between '93 and '99 datapoints, extending (arbitrarily of course!) to '05. Now, if I get date for say '80-92, and the same trend stands, that would be interesting.

Now, if I get date for say ‘80-92, and the same trend stands, that would be interesting.

Robert Shiller does have a similar analysis. The result is that prices are really out-of-whack with the long-term trendline.

Face Reality, Jack can definitely afford his home. Moreover, if he has locked in a low Prop 13 property tax, there may not be much incentive for him to sell.

Buying a long-term home with room to grow without stretching is not easy for most people. If someone can afford one nontheless with some margin of error, I would say enjoy your house.

I don’t quite get the bear position which says a crash is coming, don’t buy, but don’t sell either.

Perhaps I am not just any bear. ;)

Real estate is probably a good investment for the long term if one does not have an absurd entry point. Jack's entry point was pretty good.

Face Reality, would you prefer me to say "sell, sell, sell" or "buy, buy, buy"? ;)

Sell sell sell, and then put your money in the stock market! :D

Sell sell sell, and then put your money in the stock market!

Any stock tip?

I would definite recommend selling investment properties in any bubble area. One may keep a primary residence and perhaps a vacaton home depending on his/her comfort level. Selling is not a bad idea either if one feels right about it.

I am using only the consumption view of housing here.

(Not investment advice)

I don’t get all these proposals for letting people invest their social security money in the stock market.

I get the idea... this way, the government can blame the market if the retirees do not have enough money.

I’m always surprised at people’s unrealistic expectations from 401(k).

I share the same surprise. People seem to think that the "average historical return of the stock market" is the return they are going to get in the next 40 years. They have no concept of risk and variance.

When I hear about expected returns of 7% or 10% per year, I’m surprised. The market will really need to go up a lot in the not-too-distant future to compensate for the 0% return over 1999-2005, so I still get 7% or 10% per year!

The stock market does seem to have remarkable movements. Actually, much return occurs in just a few days.

However, most people do not realize that if a bear market occurs near their retirement, they will do a lot worse.

...but I think it’s irresponsible that 401(k) is being pushed as a way for people to take care of their retirement needs...

I totally agree. Too bad I have highly educated friends who believe in the propaganda. Too me, I rather count on real-estate. (Entry point is important though.)

Let me add that there are balanced stocks/bonds/commodities investment strategies that should work though. But they take a lot of work.

I think a "passive" real-estate portfolio should outperform a passive 401(k) account with index funds. However, there are a lot of other possibilities out there.

(Passive means Buy-and-Hope. Not investment advice.)

who has the time and expertise to be an “active” 401(k) investor?

That's why you have to become a Merrill client. ;)

(Not affiliated with Merrill Lynch)

arthur, housing can also be a driver in a downturn as people suddenly realign their projected growth of "wealth" with the reality. This has happend before elsewhere in the world.

arthur, housing can also be a driver in a downturn as people suddenly realign their projected growth of “wealth” with the reality. This has happend before elsewhere in the world.

No doubt. The so-called "multipier effect" also works in reverse. This recent CNN-Money article lends credence to the idea that much of today's consumption is directly related to the housing-price mutliplier effect:
"Cash-out Refis Soar"
tinyurl.com/9ckbe