A place for residents of Marin County, CA and others to express their views regarding the real estate bubble and in particular the Marin real estate market
Sunday, April 12, 2009
Open Thread
We desperately need a new thread. Discuss what you want.
"With articles like this coming out of Time magazine, it is inevitable that in the immediate future, the United States will be split into two partisan camps. However, this will not be the traditional schism of republicans vs. democrats, contrary to Mr. Barney Frank's attempt to start ideological partisan warfare. The real split will be of naive, easily-manipulated, small-time mom and pop investors, who only care about looking at their daily yahoo finance screens and 401(k) statements, seeing more black than red, and only focusing on what happened in the immediate past, and the forward looking taxpayers, who see the upcoming budget deficit fiasco, the social security ponzi scheme, the Medicare/Medicaid debacle, the ridiculous underfunding in public and corporate pension funds, the rising city and state taxes, the shuttering factories, the rising unemployment, the plummeting American production base, the "seasonally" upward-adjusted economic data coupled with consistently downward revised prior economic releases, the increasing savings rate and the multi trillion discrepancy in consumer purchasing power."
I am completely new to this forum. I live in NY and was an avid reader of a NJ real estate bubble thread when I bought a few years ago. I might be moving back to the bay area and noticed the desire to start a new thread here. Any good info or sources on relocating from NY to the bay area? Could be anything ranging from cost of living comparisons to different process for buying a house to typical relocation packages from new employers. Thank you!
Hi there to all agents and buyers. With the current market crisis, I would like to discuss Mexico. I am an agent in a small town in Mexico called Ajijic. Over the last 10 years Ajijic has become one of the most talked about retirement areas for Americans and Canadians in the world and is rated within the top 5 best climates year round. This charming little town is located on the biggest lake in Mexico Lake Chapala and is something to consider when trying to get more bang for your buck these days. I am always interested in referral exchanges, and if you have yet to investigate Mexico, check it out!
Remember when I said 'why should we pay Federal taxes when the Fed seems able and willing to create as much money as it wants, when it wants'?
Well, a tax revolt may be coming:
http://tinyurl.com/dacut7
Bring it!
And while you're at it, get rid of that God-awful Prop. 13 I say. What a disaster. Why should we pay a tax on something we own year after year? Why should renters get a "free ride" by benefiting from the things property tax supposedly pays for? Besides, it would be "good" for house prices as it would push prices up. Sellers would love that. :P
And get rid of income taxation as well -- institute a bigger sales tax in its place. Let the consumers pay based on what they consume. What could be more democratic than that?
Prop 13 perhaps encapsulates the nimbyism which defines a generation, as well as underscores my ire at how one of the wealthiest states can figure so low on education stats and public infrastructure. What is the major malfunction here? Obviously, many Californians are so impressed with themselves that they don't bother to think ahead--hello Marin? Got your once-cheap US Berkeley degree--check. You have your degree, house, retirement--so you're set! Now pretend to live in the 60s forever, while others scrimp to have a family amidst the overblown communities of SFBay.
In the beyond belief category, just last weekend my sister admonished me for not buying a house now--because apparently "we'll never see prices like this again". This is what happens when you let your clique think for you...it's a good thing she did not hear about Madoff's "amazing opportunity".
The American health care system is actually a risk management system.
This morning I watched the hosts of cnbc have a "discussion" regarding the American "health care" system. Basically the two hosts and one of the guests joined in together as a 3 way pile on to the one guest who was arguing for national health care in America. I have a real problem with most of the media outlets acting as a propaganda machine in favor of profit even in the case of human suffering. One of the cnbc hosts (Erin) actually asked the question "Is health care a human right?" To me, that's like asking weather air should continue to be free for us all to breathe.
The one guest (champion for health care reform) argued that the health insurance industry only wants to insure healthy people (and exclude those with pre-existing conditions). Meanwhile, the pro-profit guest on the show argued that the insurance industry makes a profit and enables America to have the best health facilities in the world. My question is what is this best health care system for and at what cost to us as Americans and for whom will it benefit if none of us can afford it? I hear of Americans going to South America, Mexico, and India for operations because the cost is too high here in America. So what is the point? All of us in America have to pay higher health insurance premiums just so insurance companies and institutions can be best in the world. But only for the highest bidder? I have heard others exclaim that the health insurance industry is a third party leach on health care and that they do not make anyone more healthy for it and are just there to make a profit.
In conclusion, I see a common thread here. No matter if we are talking about the real estate bubble, the economic fiasco, the robbing of taxpayers by Wall Street firms and Goldman Sachs, or health care...the media is not only not reporting what is wrong or even the facts in any of these issues...but are outright spinning the information to the benefit of the rich and powerful status quo. Until and unless the media starts doing some real reporting and telling the truth...we will continue to live in a broken world.
It's high time we all wake up, stop working 40-60 hours a week and having only 3 weeks of vacation a year, and sky high costs for health care and prescriptions. While the rest of the world has cheap or free health care, 6 weeks of vacation and much more time for actually living and enjoying their families and friends.
The Marin RE Machine's hooker (of course, the Marin IJ) had another headliner noting "Prices up from February"... Essentially trying to entice people to buy now before the train leaves the station again... Amazing.. Well, not really amazing; more like pathetic.. yea, that's the better word to describe the RE market and attempts by the machine and the MSM to revive it... pathetic..
Just looking at a few price points on a few areas that I watch, I know we've got another 20% + correction to go... I think we'll see that dragged out for a while from what I'm seeing until all that is left on the sidelines are the "non-believers" ...
Marinite.. I say we plan a get-together sometime down the road with some of the regulars on here... Maybe at the peak of the sales season, so we can toast the toasted RE market...
The ARM-reset tsunami redux is coming. Real estate agents are secretly calling it "May Day" because it's supposed to start in May. Even wealthy yuppies had to use stupid loans to buy their $3+million homes, so I expect a flood of new inventory soon....
"Home sales in Marin last month continued to highlight buyer preference for discounted bargains as the overall median price dipped nearly 26 percent from last year's level, matching trends across the Bay Area."
This has to be my favorite quote from the Marin IJ.article. Buyer preference for "discounted bargains"... If it weren't for those terrible conventional lending standards, buyers would be lined up to pay more, I'm sure.
The MSM just refuses to get it. Those foreclosed "discounted bargains" are in line with incomes and what people can afford with conventional lending practices, that's why those houses are selling. And foreclosures were 20%+ of Marin sales, so the trend continues upward.
And the median dipped 26%? What a delicate way to phrase it. Not plunge. Not plummet. Not tank. Not crater. So all those under water FB's should just close their eyes and imagine a lovely dip in a swimming pool as they write their next mortgage payment.
I've had several friends who all bought within the last eight months (some as recently as 3 months ago) all tell me that they wished they listened to me and waited... they are all either underwater or at break-even after 10% down, already... they won't be the last, either... no reason to buy now, that's for sure..
I can hear the squeaking and panting from the RE machine's efforts to hold the line on prices... sorry, it will eventually snap again as prices will continue their march to historic equilibrium with wages..
All that needs to happen for a quick 15-20% price correction is for the Chinese to flinch at our historic low long bond yields and all bets are off... mortgage rates will jump and housing prices will plummet (again).. (or, as the IJ might say, "see some slight discounting again")..
Wow on that article... what a shocker, OMB is seeing less revenue than previously projected and now the deficit is expected to hit $1.8T this year... wonder if CA Accountant still doesn't see a problem with our deficit or total debt as a nation ?
Now that the financial shenanigans are over with (at least we sure as hell hope so), do you think the heads of the non-housing major industries support high housing prices or housing prices decoupled from wages ? Are high housing prices good for the US economy ?
I don't think so and I suspect I'm not alone.... I don't think any real business leader supports them... not if they have any sense to them.. GM loved the RE machine during the bubble years as they pumped out those HELOC financed Suburbans and Tahoes like there was no tomorrow... what now? Well, now they have to face their business model head on and it's not pretty... Now, they have to compete with not only Toyota and Honda for their market share of the auto industry, they also have to compete with the RE shills and fraudsters for their piece of the American consumer's pie..
Only problem is the RE machine is still hogging more of that pie than they should be, and the only reason why they can and have been able to hog the pie over the past 10 or so years was due to the mania they created and all financial fraud they perpetrated on the American publice along the way, which was obviously necessary to feed the mania..
All that's ending, and thank god for that..
Housing is still 20% or so over priced here in Marin per historic standards..
"Only problem is the RE machine is still hogging more of that pie than they should be, and the only reason why they can and have been able to hog the pie over the past 10 or so years was due to the mania they created and all financial fraud they perpetrated on the American publice along the way, which was obviously necessary to feed the mania..
All that's ending, and thank god for that..
Housing is still 20% or so over priced here in Marin per historic standards.."
Let's take a $100,000 home right now. (I know, you are screaming about that not being realistic, but just stay with me.)
I just got a 5.125% 30 year fixed rate mortgage. I will pay $196,015 in principal and interest in 30 years.
What if you wait for the market value to "correct" downward 20%? The interest rate will be somewhere around 8%, if not higher and that $100K home will sell for $80K. You will pay $211,324 in principal and interest in 30 years.
Now, what happens if we see conditions like the mid-80s? Rates will hover around 14% and home value drops to $50K. You will pay 213,276 in principal and interest in 30 years.
Don't believe me, get out your BA-II business calculator and do the math yourself.
In no way am I advocating buying a home you cannot afford. However, don't assume a future 50% hit to home prices is the only factor in the Time Value of Money or the true purchase price of a home.
18 comments:
TIME Magazine: “The Banking Crisis is Over”. Is the banking crisis really over? According to this site, it is far from over:
http://zerohedge.blogspot.com/2009/04/imminent-disinformation-schism.html
Here is some of the quote:
"With articles like this coming out of Time magazine, it is inevitable that in the immediate future, the United States will be split into two partisan camps. However, this will not be the traditional schism of republicans vs. democrats, contrary to Mr. Barney Frank's attempt to start ideological partisan warfare. The real split will be of naive, easily-manipulated, small-time mom and pop investors, who only care about looking at their daily yahoo finance screens and 401(k) statements, seeing more black than red, and only focusing on what happened in the immediate past, and the forward looking taxpayers, who see the upcoming budget deficit fiasco, the social security ponzi scheme, the Medicare/Medicaid debacle, the ridiculous underfunding in public and corporate pension funds, the rising city and state taxes, the shuttering factories, the rising unemployment, the plummeting American production base, the "seasonally" upward-adjusted economic data coupled with consistently downward revised prior economic releases, the increasing savings rate and the multi trillion discrepancy in consumer purchasing power."
I am completely new to this forum. I live in NY and was an avid reader of a NJ real estate bubble thread when I bought a few years ago. I might be moving back to the bay area and noticed the desire to start a new thread here. Any good info or sources on relocating from NY to the bay area? Could be anything ranging from cost of living comparisons to different process for buying a house to typical relocation packages from new employers. Thank you!
Hi there to all agents and buyers. With the current market crisis, I would like to discuss Mexico. I am an agent in a small town in Mexico called Ajijic. Over the last 10 years Ajijic has become one of the most talked about retirement areas for Americans and Canadians in the world and is rated within the top 5 best climates year round. This charming little town is located on the biggest lake in Mexico Lake Chapala and is something to consider when trying to get more bang for your buck these days. I am always interested in referral exchanges, and if you have yet to investigate Mexico, check it out!
Remember when I said 'why should we pay Federal taxes when the Fed seems able and willing to create as much money as it wants, when it wants'?
Well, a tax revolt may be coming:
http://tinyurl.com/dacut7
Bring it!
And while you're at it, get rid of that God-awful Prop. 13 I say. What a disaster. Why should we pay a tax on something we own year after year? Why should renters get a "free ride" by benefiting from the things property tax supposedly pays for? Besides, it would be "good" for house prices as it would push prices up. Sellers would love that. :P
And get rid of income taxation as well -- institute a bigger sales tax in its place. Let the consumers pay based on what they consume. What could be more democratic than that?
Prop 13 perhaps encapsulates the nimbyism which defines a generation, as well as underscores my ire at how one of the wealthiest states can figure so low on education stats and public infrastructure. What is the major malfunction here? Obviously, many Californians are so impressed with themselves that they don't bother to think ahead--hello Marin? Got your once-cheap US Berkeley degree--check. You have your degree, house, retirement--so you're set! Now pretend to live in the 60s forever, while others scrimp to have a family amidst the overblown communities of SFBay.
In the beyond belief category, just last weekend my sister admonished me for not buying a house now--because apparently "we'll never see prices like this again". This is what happens when you let your clique think for you...it's a good thing she did not hear about Madoff's "amazing opportunity".
Ok, here's a new thread...
The American health care system is actually a risk management system.
This morning I watched the hosts of cnbc have a "discussion" regarding the American "health care" system. Basically the two hosts and one of the guests joined in together as a 3 way pile on to the one guest who was arguing for national health care in America. I have a real problem with most of the media outlets acting as a propaganda machine in favor of profit even in the case of human suffering. One of the cnbc hosts (Erin) actually asked the question "Is health care a human right?" To me, that's like asking weather air should continue to be free for us all to breathe.
The one guest (champion for health care reform) argued that the health insurance industry only wants to insure healthy people (and exclude those with pre-existing conditions). Meanwhile, the pro-profit guest on the show argued that the insurance industry makes a profit and enables America to have the best health facilities in the world. My question is what is this best health care system for and at what cost to us as Americans and for whom will it benefit if none of us can afford it? I hear of Americans going to South America, Mexico, and India for operations because the cost is too high here in America. So what is the point? All of us in America have to pay higher health insurance premiums just so insurance companies and institutions can be best in the world. But only for the highest bidder? I have heard others exclaim that the health insurance industry is a third party leach on health care and that they do not make anyone more healthy for it and are just there to make a profit.
In conclusion, I see a common thread here. No matter if we are talking about the real estate bubble, the economic fiasco, the robbing of taxpayers by Wall Street firms and Goldman Sachs, or health care...the media is not only not reporting what is wrong or even the facts in any of these issues...but are outright spinning the information to the benefit of the rich and powerful status quo. Until and unless the media starts doing some real reporting and telling the truth...we will continue to live in a broken world.
It's high time we all wake up, stop working 40-60 hours a week and having only 3 weeks of vacation a year, and sky high costs for health care and prescriptions. While the rest of the world has cheap or free health care, 6 weeks of vacation and much more time for actually living and enjoying their families and friends.
Sf sailor -
OMG but you so nailed it!
Just in case anyone wants more details on California's employment situation....
From Beacon Economics (Chris Thornberg):
http://www.bewebstats.com/EmploymentReport/
The Marin RE Machine's hooker (of course, the Marin IJ) had another headliner noting "Prices up from February"... Essentially trying to entice people to buy now before the train leaves the station again... Amazing.. Well, not really amazing; more like pathetic.. yea, that's the better word to describe the RE market and attempts by the machine and the MSM to revive it... pathetic..
Just looking at a few price points on a few areas that I watch, I know we've got another 20% + correction to go... I think we'll see that dragged out for a while from what I'm seeing until all that is left on the sidelines are the "non-believers" ...
Marinite.. I say we plan a get-together sometime down the road with some of the regulars on here... Maybe at the peak of the sales season, so we can toast the toasted RE market...
why not, life is short..
The ARM-reset tsunami redux is coming. Real estate agents are secretly calling it "May Day" because it's supposed to start in May. Even wealthy yuppies had to use stupid loans to buy their $3+million homes, so I expect a flood of new inventory soon....
"Home sales in Marin last month continued to highlight buyer preference for discounted bargains as the overall median price dipped nearly 26 percent from last year's level, matching trends across the Bay Area."
This has to be my favorite quote from the Marin IJ.article. Buyer preference for "discounted bargains"... If it weren't for those terrible conventional lending standards, buyers would be lined up to pay more, I'm sure.
The MSM just refuses to get it. Those foreclosed "discounted bargains" are in line with incomes and what people can afford with conventional lending practices, that's why those houses are selling. And foreclosures were 20%+ of Marin sales, so the trend continues upward.
And the median dipped 26%? What a delicate way to phrase it. Not plunge. Not plummet. Not tank. Not crater. So all those under water FB's should just close their eyes and imagine a lovely dip in a swimming pool as they write their next mortgage payment.
I've had several friends who all bought within the last eight months (some as recently as 3 months ago) all tell me that they wished they listened to me and waited... they are all either underwater or at break-even after 10% down, already... they won't be the last, either... no reason to buy now, that's for sure..
I can hear the squeaking and panting from the RE machine's efforts to hold the line on prices... sorry, it will eventually snap again as prices will continue their march to historic equilibrium with wages..
All that needs to happen for a quick 15-20% price correction is for the Chinese to flinch at our historic low long bond yields and all bets are off... mortgage rates will jump and housing prices will plummet (again).. (or, as the IJ might say, "see some slight discounting again")..
http://www.bloomberg.com/apps/news?pid=20601009&sid=anA.WOxto6qQ&refer=bond
Wow on that article... what a shocker, OMB is seeing less revenue than previously projected and now the deficit is expected to hit $1.8T this year... wonder if CA Accountant still doesn't see a problem with our deficit or total debt as a nation ?
Now that the financial shenanigans are over with (at least we sure as hell hope so), do you think the heads of the non-housing major industries support high housing prices or housing prices decoupled from wages ? Are high housing prices good for the US economy ?
I don't think so and I suspect I'm not alone.... I don't think any real business leader supports them... not if they have any sense to them.. GM loved the RE machine during the bubble years as they pumped out those HELOC financed Suburbans and Tahoes like there was no tomorrow... what now? Well, now they have to face their business model head on and it's not pretty... Now, they have to compete with not only Toyota and Honda for their market share of the auto industry, they also have to compete with the RE shills and fraudsters for their piece of the American consumer's pie..
Only problem is the RE machine is still hogging more of that pie than they should be, and the only reason why they can and have been able to hog the pie over the past 10 or so years was due to the mania they created and all financial fraud they perpetrated on the American publice along the way, which was obviously necessary to feed the mania..
All that's ending, and thank god for that..
Housing is still 20% or so over priced here in Marin per historic standards..
"Only problem is the RE machine is still hogging more of that pie than they should be, and the only reason why they can and have been able to hog the pie over the past 10 or so years was due to the mania they created and all financial fraud they perpetrated on the American publice along the way, which was obviously necessary to feed the mania..
All that's ending, and thank god for that..
Housing is still 20% or so over priced here in Marin per historic standards.."
Amen Brother!
Housing is still 20% or so over priced here in Marin per historic standards...
Let's take a $100,000 home right now. (I know, you are screaming about that not being realistic, but just stay with me.)
I just got a 5.125% 30 year fixed rate mortgage. I will pay $196,015 in principal and interest in 30 years.
What if you wait for the market value to "correct" downward 20%? The interest rate will be somewhere around 8%, if not higher and that $100K home will sell for $80K. You will pay $211,324 in principal and interest in 30 years.
Now, what happens if we see conditions like the mid-80s? Rates will hover around 14% and home value drops to $50K. You will pay 213,276 in principal and interest in 30 years.
Don't believe me, get out your BA-II business calculator and do the math yourself.
In no way am I advocating buying a home you cannot afford. However, don't assume a future 50% hit to home prices is the only factor in the Time Value of Money or the true purchase price of a home.
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