patrick.net

 
register or log in

#housing #investing #politics
10,842 registered users, 2 online now: MotorJoint, Patrick
public post private group chat

Is David Lereah going to Hell?

By HARM   2005 Aug 28, 7:42am   ↑ like   ↓ dislike   2 links   14,120 views   170 comments   watch (0)   share   quote  

Ok, I know I said I was going into temporary retirement for a few months --and I will... soon... I promise ;-).

But every time I think I'm done with new threads, I read statements like the ones below from industry leaders --on whose words many people base their buying decisions and the MSM dutifully reports, often without question. And I get little hot under the collar. Every time I think these lying SOBs can't sink any lower and become even more craven and irresponsible, they go and prove me wrong again.

So while it's not all that surprising to me that David Lereah (rhymes with "diarrhea") and other industry scumbags have the gall and utter irresponsibility to make public statements like this --not to mention his latest magnum opus, "Are You Missing the Real Estate Boom?" (check out the cover art for it btw, a real eye-popper), I'd like to know what your impressions are. Should he go to Hell or will Purgatory suffice? A related question might be, why hasn't his own tongue dislodged itself from his mouth and strangled him by now?

Source: L.A. Times
"Equity Is Altering Spending Habits and View of Debt"
(August 28, 2005)

"If you paid your mortgage off, it means you probably did not manage your funds efficiently over the years," said David Lereah, chief economist of the National Association of Realtors and author of "Are You Missing the Real Estate Boom?" "It's as if you had 500,000 dollar bills stuffed in your mattress."

He called it "very unsophisticated."

Anthony Hsieh, chief executive of LendingTree Loans, an Internet-based mortgage company, used a more disparaging term. "If you own your own home free and clear, people will often refer to you as a fool. All that money sitting there, doing nothing."

HARM

#housing

« First     « Previous     Comments 131-170 of 170     Last »

131   HARM     2005 Aug 30, 7:48am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

...our young people cannot afford to buy in their hometowns. Those who are in a position to wait will probably rent until the market cycles back around.

My wife and I have been waiting for 2 years now, and I know many who've been waiting much longer than that. And I know many more who got sick of waiting, packed up and left when the opportunity presented itself, including both of my brothers and nearly all of my CA-born cousins. When I get my opportunity (or make it myself), I'm joining them.

This is one of the reasons why I don't buy the "people will pay any price to live here/intangibles" argument (sorry, Jack). When I leave, I promise to turn the lights out and take the flag with me ;-).

132   SQT15     2005 Aug 30, 8:19am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

I would leave Ca in a heartbeat if the oportunity presented itself. I am sick to death of reassuring my husband that yes a 6 figure income is very good and it should in a rational world be able to buy a very nice home. But in Ca we'd have to take out a NAAVLP at least 5x's my husbands income to even think about buying some tiny shitbox that would be smaller than our rental. We've been looking at rental homes lately, but that's a crapshoot since the market is so squirrelly right now. I'm afraid that we'd move in, and they'd kick us out in a year to sell. My husband's job right now would be tough to transfer, but if it gets easier, we're outta here.

133   Peter P   3/3 = 100% civil   2005 Aug 30, 8:24am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

I am sick to death of reassuring my husband that yes a 6 figure income is very good and it should in a rational world be able to buy a very nice home.

A six-figure income is of course very good... did he read too many posts from MarinaPrime? ;)

134   SQT15     2005 Aug 30, 8:27am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

A six-figure income is of course very good… did he read too many posts from MarinaPrime?

Not if I could help it. Talk about making my job twice as hard.

135   HARM     2005 Aug 30, 9:03am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

I remember a while back when FaceReality & Fake P were still posting on a regular basis. One of them (or both) basically said they expected things to devolve here into a sort-of "Running Man" type future, where you have exclusive ultra-rich gated communities on the beaches, surrounded by a wasteland of vast squalid urban ghettos where 10-20 illegals are packed to a room. My response at the time was MIRAGE and CHUMPS (new people --see "Housing Bubble Glossary" thread).

I certainly hope this vision of CA's future turns out to be wrong, current credit/asset Bubble notwithstanding. This is not a future I wish to inhabit, not even as one of the elite landlords. "Gotta go to the store for some milk, honey, can I take one of the bodyguards with me?"

It's kind of a moot point for me, though. At this point in our lives, my wife and I want a better quality of life, and we don't care to wait another 5+ years for it. Prices will no doubt correct in the coming years, but by then we'll be happily settled someplace else. Multiply that by X thousands, and I think you can see where things are headed for Hotel California.

136   HARM     2005 Aug 30, 9:28am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

You are right. People ARE leaving in droves. But to my mind, “intangibles” was never an “either/or” argument. Both can be true. People are definitely leaving, AND the reason so many people are leaving is BECAUSE there are still others who will “pay any price” to live there. The bottom line is: Does the exodus out weigh the numbers of people who are buying? Again, the only reason that people ARE leaving, is because someone is paying “any price” (higher price) to live there. I know you will say its also a lot of speculators, and you will be right on that point also. All three can be true also.

Jack, I don't deny that CA has (or had) lots of positive intangibles --great weather, good beaches, lots of fun stuff to do/see here, etc. However, I also see plenty of PIBs (just couldn't resist using that again ;-)) in other places as well that don't require an NAAVLP(tm) and selling your soul to the devil. I wouldn't say high housing prices are the "only" reason middle class people are leaving in droves. Rising population (esp. due to illegal immigration), pollution, flat or falling wages, longer commutes, environmental degradation (see rising population), etc. all play a big role.

This is why I'm so bearish on California --I see the PIBs slowly evaporating right before my eyes every day, right along with affordability. Without a middle class to support them, I believe prices will fall hard over a long period, and may not recover for a long time.

137   Peter P   3/3 = 100% civil   2005 Aug 30, 9:32am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

I remember a while back when FaceReality & Fake P were still posting on a regular basis.

Where are they? Are they in hibernation until November 1?

138   Jamie     2005 Aug 30, 10:11am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

HARM, I agree with you that CA's intangibles are degrading, esp. thanks to increasing population and cost of living. We moved here over 12 years ago--to the desert between LA and Vegas--and stayed for 2 yrs, then were stationed elsewhere. When we were stationed here again 2 years ago, I was astonished at the population increase in those years we'd been away. When a craphole high desert town like Victorville is experiencing a population and real estate boom, you know things are getting bad. It also astonishes me to see the hoards of people crowding the highway each weekend on their way from LA to Vegas. If it's so fabulous to live there, then why must so many people sit in unbelievable traffic trying to escape so they can get drunk/laid/lose all their money gambling?

139   Peter P   3/3 = 100% civil   2005 Aug 30, 10:27am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Is it just me? I am seeing a sudden increase of inventory in 400K - 600K condos and townhomes. Looks like the "pre-crash condo-slide" is coming very soon.

140   Peter P   3/3 = 100% civil   2005 Aug 30, 10:57am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Where (which zip code) did you see these inventory? I thought the inventory should be low during the labor day long weekend…

The inventory in 700k~900k single family home in cupertino/sunnyvale/w.sj are still very limited.

Basically the entire Silly Valley, from Millbrae down to San Jose up to Fremont. But I am focusing on 400K - 600K condos.

SFH prices will fall only after condo crashes.

141   Peter P   3/3 = 100% civil   2005 Aug 30, 11:09am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Odyssey, what is your theory about the market relying on the 700K-900K segment?

142   Jimbo     2005 Aug 30, 11:49am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Seriously, you should consider renaming this the Sour Grapes Housing blog.

I think California is great, the quality of life in San Francisco has been improving, not going down and I don't intend to ever leave. If I had a long commute from the suburbs, I might think differently, I don't know.

The City as a whole does not have lots of children, but some neighborhoods are chock full of them. I live in Noe Valley and I see half a dozen women with strollers walk by in front of my house in the hour I drink my coffee and read my email every morning. The Sunset also has lots of children.

I had to really stretch to get my place 3 years ago, but I convinced my fiancee that the numbers made sense and that if we didn't buy then we might get priced out forever. Unless there is a serious crash, that prediction was proven right. We are making 30% now than we were making then, but we would not be able to afford our duplex.

It takes two incomes to afford a house now in California, especially near the coast. The stay at home was never an option, except for the wealthy anyway, except for a brief period in the sixties. I know you all think that there is something wrong with that, but that is the hard cold economic truth and complaining about it doesn't change anything.

143   Jimbo     2005 Aug 30, 11:51am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

That next to last sentence should start with "The stay at home Mom..."

Sorry.

144   Peter P   3/3 = 100% civil   2005 Aug 30, 11:55am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Huh?

145   Jimbo     2005 Aug 30, 12:03pm  ↑ like   ↓ dislike   quote   top   bottom   home   share  

I don't expect 20% y.o.y. appreciation to continue forever. I am surprised it continued at this rate for as long as it did.

I think home prices in California will tend to increase at a bit above income over the long run.

My kids will probably have to buy a shitty, tiny house in the suburbs (on two incomes) and build equity for a decade and then trade up to a house that they can raise a family in.

Just like anyone can do today.

146   Peter P   3/3 = 100% civil   2005 Aug 30, 12:05pm  ↑ like   ↓ dislike   quote   top   bottom   home   share  

It takes two incomes to afford a house now in California, especially near the coast. The stay at home was never an option, except for the wealthy anyway, except for a brief period in the sixties.

Wrong, genius. ;) (sorry... can't resist)

Our fellow member, Fake P, is a proud recent homeowner with single income. It takes two incomes to "afford" a home of one's "want".

147   Jimbo     2005 Aug 30, 12:07pm  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Oh, regarding New Mexico. Yes, it a beautiful and still relatively inexpensive place to live.

My boss just quit to move to New Mexico, which is how I got a raise. Actually, he will still tele-commute, but he couldn't manage the group from 1000 miles away. He is from there and really misses it. He is really excited about the prospect of not having to rent a tiny two bedroom in foggy El Cerrito and insted having a large home with room for an art studio.

I know another guy who is super smart, has a PhD in physics and left the Bay Area to go work in the Naval Weapons Lab there. He also bought a large home on 1/2 acre.

So I can definitely see the advantages. I just like California too much to ever want to leave.

148   Jimbo     2005 Aug 30, 12:11pm  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Wow, these homes are even cheaper than I imagined.

Not to my style, but a new big house for $219k:

http://www.nmhomes.com/4800ch.html

149   Peter P   3/3 = 100% civil   2005 Aug 30, 12:12pm  ↑ like   ↓ dislike   quote   top   bottom   home   share  

I heard that speculators from California are spreading from AZ to NM now. Greed has no bound.

150   Peter P   3/3 = 100% civil   2005 Aug 30, 12:13pm  ↑ like   ↓ dislike   quote   top   bottom   home   share  

The numbers may have added up to you personally 3 years ago, but with every passing month, not only have the numbers increasingly not added up, but divergences and aberrations like this are now the NORM. Scary stuff I say.

Divergences tend to converge. There is no new paradigm. Large divergence only means large eventual correction.

151   quesera     2005 Aug 30, 12:17pm  ↑ like   ↓ dislike   quote   top   bottom   home   share  

@Jimbo:

That works for 20-30-somethings with no school-age kids. Great time to live in SF.
Most people will eventually want better schools, more space, a yard, off street parking, neighborhood kids, time to spend with kids, etc.

Quality of life is defined differently by everyone. And it changes over time. SF was exactly where I wanted to be for ten years, but not any more. You might change your mind too, but if you do, at least you'll be in a great position to move. SF real estate will always be 3-4x just about everywhere else.

152   Jimbo     2005 Aug 30, 12:25pm  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Yeah, sorry if I sound snarky.

I am happy to be here now, maybe, probably even, considering how my fiancee feels, I will have to move to the suburbs somewhere. I will fight a holding action as long as I can, but unless we decide to put the kids in private school for at least K-6 we will have to at least change neighborhoods. I would like to retire here, too, I see lots of elderly here and it seems like a great place to be retired.

As for the whole divergence from the mean thing, yes I agree. There has to be a correction somehow. I have been promoting the "rust not bust" theory since I first started posting here, but I am starting to think it will be more like mini-pop then rust for a decade. Everyone is right that the current economic trends cannot continue.

153   Peter P   3/3 = 100% civil   2005 Aug 30, 12:28pm  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Found the CAR article about Bay Area income slightly declining. Look carefully at the chart on the bottom!

When confronted about this fact, I am sure realtors will say that income is irrelevant. It is MIRAGE that matters.

Honestly the MIRAGE argument is more plausible (still shaky) in places like Vancouver, which is more desirable (IMO) yet has a much lower costs of living.

154   Peter P   3/3 = 100% civil   2005 Aug 30, 12:30pm  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Yeah, sorry if I sound snarky.

Don't worry. Your opinion is very appreciated. :)

Honestly, I think SF will fare a lot better than the rest of the Bay Area. It is just a great place to be in.

As I have said many times, it is fine to own a home so long as one is not stretching. You will do just fine in the long run.

155   Peter P   3/3 = 100% civil   2005 Aug 30, 12:54pm  ↑ like   ↓ dislike   quote   top   bottom   home   share  

New thread: When will you buy? What will you buy?

156   Peter P   3/3 = 100% civil   2005 Aug 30, 12:57pm  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Back on topic, is David Lereah going to California?

LOL :lol:

There are some "nice people" pockets in California... Davis used to be nice. Is it still nice?

157   KurtS     2005 Aug 30, 1:42pm  ↑ like   ↓ dislike   quote   top   bottom   home   share  

There are some “nice people” pockets in California

Yes, there are--I think Jack would agree. (another "intangible"?)

158   Jamie     2005 Aug 30, 1:44pm  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Jimbo, I agree with you about the many strollers in Noe Valley. I look at them though and wonder if they'll still be living there in a few years when their kids want to ride bikes and stuff and they have to haul them to the park to do it. We stay in the Sunset every time we visit, and while there may be lots of kids there, the only time I see them is when they're walking to and from school. It's just kind of depressing to me to see neighborhoods where kids never play outside, but I guess that's the norm in most places now.

But with regard to SF being a kid-friendly place or not, I actually think it does have a great deal to offer kids, more than many other places--the ocean, Golden Gate park, the Academy of Sciences, the kid-friendly museums, the playgrounds, the public transportation... In my 5-yr-old son's view, the city is one gigantic amusement park.

For me though, I need lots of sunshine and lots of greenery, and I love being able to let my kids ride their bikes and their hundred other ride-on toys right outside my house (we live in a suburban neighborhood), and go looking for leaves and bugs and rocks right out in the front yard, etc.

I think both suburban and urban places have pros and cons for raising a family, but with my kids at their current ages, I personally think the burbs are the easiest place to raise them (not that I have a choice though, since the army decides where we live at the moment). Still, if it were up to my husband and son, there would be no better place to live than SF. If it were up to me and money were no object, I'd head straight to Marin.

I don't mean to make this sound like it's contradicting my earlier post--my point then was that when we're in the city, I don't see many other families walking around together. Maybe I'm looking in the wrong places. :-)

159   Jimbo     2005 Aug 30, 2:15pm  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Come down to 24th Street next time you visit then. You will see teenagers hanging out in front of the Starbucks, trying to look bored, families walking together back from dinner with their children and young (and not so young) couples with their baby strollers. Along with the occasional 20 something hipster spilling out of a local bar and an even rarer panhandler. It is quite a mix.

I live on a relatively quiet street and the kids from across the way play in the street. It is still too buy for me to believe that it is safe, but they do it. They watch out for cars, but still...

Every playground is full of playing kids on the weekends. Check out Douglass playground (26th and Diamond) next time you are here.

Noe is kind of looked down on by much of the rest of The City as being boring and unsophisticated, full of "breeders" but it suits me just fine. I have to admit it is the most "suburban" in character, but that is just because the children are the focus of the community here, something that is extremely rare in urban America.

I often wonder why I don't see more children outside in The Sunset as well. I think it has something to do with the mostly immigrant community there not wanting to let their kids run wild, but I am not really sure.

160   Peter P   3/3 = 100% civil   2005 Aug 30, 3:21pm  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Generally, love this blog, and I love eavesdropping on the chatter. But while Vancouver may seem cheap to you, please take a gander at van-housing.blogspot.com. The median house price here has hit half a million. Median income around 60K. Median house price in Toronto, a fair city for comparison: 350K.

I agree that housing prices in Vancouver are very expensive. Cost of living (other than housing) is still a lot cheaper though. This may explain why retirees like to live there. (I hope to retire there too.)

Don't get me wrong. There is definitely a housing bubble in Vancouver. IMHO prices will correct significantly.

161   Peter P   3/3 = 100% civil   2005 Aug 30, 3:29pm  ↑ like   ↓ dislike   quote   top   bottom   home   share  

blue, do you think the Olympics in 2010 has anything to do with the bubble?

162   SQT15     2005 Aug 31, 1:02am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Jack

I think you've nailed why my husband and I are still in Ca even though we get so frustrated with the housing market. Right now the area I live in is becoming increasingly pretentious and annoying as everyone is tooling around in their new Escalades patting themselves on the back. But the area was really fantastic not too long ago. Fortunately this particular area has not been overwhelmed with all the building that has gone on everywhere else around here. So I think we keep hanging on in hopes that the level of pretention will go down with the price of the homes. We'll see.

163   Jamie     2005 Aug 31, 1:28am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Jimbo, Noe Valley sounds great. I'll definitely give it a closer look. My husband lived in that neighborhood when he was very young, but we haven't spent much time there since I've known him. Just have had brunch at a couple of good restaurants there, names of which I can't remember.

164   Peter P   3/3 = 100% civil   2005 Aug 31, 7:40am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Flak, prices in Vancouver may decline soon but I think the big bust will occur after the Olympics. When anticipation ends, prices tend to converge with the fundamentals.

165   Peter P   3/3 = 100% civil   2005 Aug 31, 7:43am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Jack, you can use some NIMBY laws. :mrgreen:

166   SQT15     2005 Aug 31, 8:16am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

The “new” guy across the street is a nice enough guy and everything, but he just about clear-cut his whole lot. This is a rather forested hillside by the way. He said he moved to this town to “enjoy the good life”, which is great. He loves the “ambience” he says, opening his arms in reference to the surrounding beauty on the hillside, (Then he eliminates almost every tree on his property, thereby gaining a great view of the three-story broadside of his neighbor’s house and roof, and a stunning telephone pole as well. But he “has a better view now”)

Egad! The rest of the neighborhood must hate this guy unless, heaven forbid, they are cut from the same cloth. What was it Prat said? Oh yeah, Tool, complete and utter.

167   HARM     2005 Aug 31, 9:18am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Any law preventing you from cutting down every flipping tree in a heavily forested area is not a NIMBY law --it's an anti-idiot law. And I'm all in favor of that.

168   SQT15     2005 Aug 31, 3:39pm  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Margie

You ROCK for not following the herd and using something not often seen these days...common sense. :)

169   HARM     2005 Aug 31, 3:59pm  ↑ like   ↓ dislike   quote   top   bottom   home   share  

My home is almost paid off. I’m so happy to have my equity all tied up! I have peace of mind… The economy can go south in October but I can still find a job paying $7.50 hr if needed to pay the bills.

I'm with Jack --that's my definition of "rich".

170   Jimbo     2005 Sep 3, 4:00am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

You know, I really have to be careful how I put this, but I think what are seeing in micro here (young families leaving, more and more priced out) is a direct result of population pressure. Which in California, is caused by immigration.

I have lived here, on and off, my whole life and I can tell you that the quality of life statewide has steadily gone down. More crowding, longer commutes, less natural beauty, more expensive home prices, yadda, yadda, yadda. All obviously caused by a combination of increased population and poor planning. Sure, some of my vision of the past is tainted by the inevitable nostalgia and it is certainly true that the air in Riverside is better than it was when I was a child, but I remember when there were orange groves and swimming pools and kids used to walk around alone or with other kids and everyone was okay with that. Okay, maybe a lot of nostalgia, looking back at that phrase, but I still maintain that population pressure is making our lives more difficult here.

And I am of two minds about this: one mind says that is great that people want to move here and great that we are attracting the best and most ambitious from around the world and great that we can share our bounty with others but the other mind is pissed that Native Californians are being priced out of our own damn state and pissed that even with relatively high taxes we cannot seem to maintain our infrastructure and schools adequately and pissed that the crowding and congestion is making what used to be a laid back California into a permanently grumpy one. And it is not even our own fault: native birth rates here are barely adequate to even replace the population, much less cause this massive population boom that is now into its sixth decade. Why should we have to pay for other nations unwillingness to deal with their population problem?

I am sure there must have been an entry dedicated to immigration but I could not find one. Perhaps that is an idea worth of discussion.

I can certainly understand the Marin NIMBY model of saying "the castle is full" and pulling up the drawbridge to further development, but that inevitably leads to extremely expensive housing as supply and demand have to meet up somehow. And the Southern California model of paving everything in sight leads to traffic jam hell. So what is the solution? Closing the borders? Probably not, not at least without some sort of modification to the existing immigration laws, so that we can attract the labor we need. Actually, that is what I would prefer to see: greater enforcement of the existing immigration laws plus an expanded way to both make legal the people already here and legalize the ones that we allow to come in the future. This current exploitation of the millions of illegal workers here is just not right, as well as screwy economically.

Would this help solve Californias overpopulation problem? Absolutely. Which would lead to cheaper housing as well as innumerable other benefits.

« First     « Previous     Comments 131-170 of 170     Last »

home   top   users   about   suggestions   contact  
topics   random post   best comments   comment jail  
patrick's 40 proposals  
10 reasons it's a terrible time to buy  
8 groups who lie about the housing market  
37 bogus arguments about housing  
get a free bumper sticker: