Tuesday, November 01, 2005

You Are Here

I like this graph which I found here. It's a few months old so the red arrow should be moved one notch to the right or maybe almost two notches.


Anonymous Anonymous said...


i have a friend who bought a pos in mv. they just got a bid for renovations for $500k.

also, you would think these places with such high prices in marin would have amazing ocean views.

Nov 1, 2005, 8:49:00 PM  
Blogger sf jack said...

For the Bay Area, among those I've talked with lately:

"We have reached a permanently High Plateau" = "prices will flatten"

No one has been able to justify their "flatten" theory other than the usual bleatings about the area's desirability.

My thought is that desire cannot easily be met when the median income (~$65K) is $100,000 below the income required to handle the median (traditional variety) mortgage (~$165K).

Nov 2, 2005, 10:02:00 AM  
Blogger Marinite said...

A flattening of the market would be a total and complete departure from all past history. The only way it could happen IMO is if income were to adjust upward in proportion to the rise in lending rates. Then the cost of ownership (monthly mortgage rate) would be constantly affordable and house prices could remain where they are. But how likely is that? Bah!

Nov 2, 2005, 10:13:00 AM  
Blogger marine_explorer said...

Another common bleating I hear:

"Real estate never drops in Marin", citing how prices have never dropped before--so they won't now.

Then I trot out examples of selling prices reduced in the last few months, and the room falls silent.

If nothing else, perhaps cognitive dissonance will protect Marin's real estate prices.

Nov 2, 2005, 10:24:00 AM  
Blogger Marinite said...

Prices in Marin have never dropped in NOMINAL dollars (except recently of course; I've received the same reaction as you, reskeptic, when I show people the reduction in prices lately). That's true. And it's true for most RE markets and because of that is the basis for inane realtor comments like "RE never goes down". But it's not true in inflation adjusted dollars. I had some graph showing that that I think I posted a long while back. If not then I have it on my disk somewhere.

Then there is the fact that if you calculate your total cost of ownership of a property by adding to the initial mortgage cost the total amounts of interest you paid, taxes, insurance, mainentance, improvements, etc. (all adjusted for inflation of course) you will almost always discover that you are not making very much money. It seems to me that the best way to actually make a large gain on a property is to "flip" it (never mind the social cost of flipping) before you pay much of any of these additional costs. I hate to say it, but it's true.

Nov 2, 2005, 10:39:00 AM  
Blogger marine_explorer said...

Yes, I hear you on "cost of ownership". 6 months ago, I walked away from buying a vacation property in my home state of WA, simply because it was not cost-effective from any angle.

This makes me really wonder about those I talk to in Marin, who boast of owning 2,3, or even 5 homes in this county. They always say they're "investments," but I wonder why they really do it--to brag about their "property empire" at parties? They have to know the real costs. It strikes me there are far more profitable places to park that much cash.

Nov 2, 2005, 10:55:00 AM  
Blogger sf jack said...

Agree with all you guys are saying:

* cognitive dissonance "saving" Marin's housing market from declining (LOL!)

* flipping vs. holding several properties

* and, better places to put money

Some "truths":

Houses are for shelter.

And cycles *always* turn.

(It wasn't easy pointing out the latter in late '99 with regard to equities; it's not easy now with real estate)

Nov 2, 2005, 2:22:00 PM  
Blogger fredtobik said...

I got it!

You downers are not 2nd or 3rd generation bitter Marinites that cannot afford a home in your birthplace! Nor do you feel that Marin is not better than 95% of other locales in the U.S.!

You are bitter realestate investors!

Now that you 'proved' you were right all along, about Marin RE bubbles, can we make the next blog?

I am thinking Mutual Fund bubbles are next, way too much money there, or maybe hedge funds, no no.. Energy that is it!

The best thing about Marin is the Marin Brew Co. gotta love that KiltLifter Ale!...

Nov 2, 2005, 3:19:00 PM  

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