Today is more important than the trivial, silly topic of Bay Area Real Estate.

Let’s face it – there are bigger, more important problems in this world.

Instead, I ask that you please read this graphic novel (or “comic book”) online interpretation of the 9/11 Report. It’s beautifully drawn, and very educational- especially towards the end.
Here’s a snippet from one page:

Wow… remember the good ol’ days?

patrick.net » Blog Archive » Quotes that will live in Infamy
Source: L.A. Times (August 28, 2005)
“Equity Is Altering Spending Habits and View of Debt”

“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.”

Source: Federal Reserve Board (February 23, 2004)
Remarks by Chairman Alan Greenspan: Understanding household debt obligations
(just as Greenspan was preparing to start RAISING rates from 1%)

“… many homeowners might have saved tens of thousands of dollars had they held adjustable-rate mortgages rather than fixed-rate mortgages during the past decade.

…American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage. To the degree that households are driven by fears of payment shocks but are willing to manage their own interest rate risks, the traditional fixed-rate mortgage may be an expensive method of financing a home.”

Source: N.Y. Times (March 25, 2005)
Trading Places: Real Estate Instead of Dot-Coms

Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors says that “South Florida is working off of a totally new economic model than any of us have ever experienced in the past.” He predicts that a limited supply of land coupled with demand from baby boomers and foreigners will prolong the boom indefinitely.

Source: CNN Money/Fortune (February 13, 2006)
A tale of two markets

If you want to know where real estate prices are headed in California’s Orange County, the man to talk to is Gary Watts. The Mission Viejo broker has 35 years of experience and doubles as a spokesman for the O.C.’s Association of Realtors.

… Since 1997, Orange County home prices have seen a 195 percent rise. Will the good times last another year? Gary doesn’t hesitate. “Fifteen percent is pretty much in the bag for Orange County in 2006,” he says. “It’s impossible for prices to go down this year.“

Source: N.Y. Times (October 16, 2005)
Chasing Ground
Bob Toll (President of Toll Brothers):

“In Britain you pay seven times your annual income for a home; in the U.S. you pay three and a half.” The British get 330 square feet, per person, in their homes; in the U.S., we get 750 square feet. Not only does Toll say he believes the next generation of buyers will be paying twice as much of their annual incomes; in terms of space, he also seems to think they’re going to get only half as much. “And that average, million-dollar insane home in the burbs? It’s going to be $4 million.”

Source: Planet Jackson Hole (September 6, 2006)
Un-Real Estate

“‘In Jackson, the market doesn’t really go down,’ said (realtor) Linda Walker. Broker Ryan Olsen agrees. ‘We are immune to the up and down treads that plague many real estate markets,’ he says. ‘Our real estate market is essentially quite ‘bullet proof!’”

My favorite one is “totally new economic model”. Silicon Valley loves those!

A Burbed reader, Scott, noted that Tom Stynes is pretty annoying. Let’s look at some quotes:

Ask the Expert
Q Hi, Tom I’m tring to get prices of houses sold in my area within the last 6 months I live at 3816 Sunflower Cir. Bowie , MD 20721
Mike, Bowie , MD 6/20/06
A Dear Mike:

If you trying to find sold prices in an area throughout the United States, I recommend you call a local REALTOR to the area in question. Even you are just trying to update current value on your property insurance with no intention or buying or selling. We get questions like your’s all the time. You might be surprised to know most agents are in the business because they like to help.

Good luck!
Tom Stynes 6/24/06

Apparently Tom has never heard of Zillow.

Q Tom, I’m considering taking a job with a prominent corporation in Mountain View and moving from Texas; however, I just can’t understand how people afford to purchase homes in the valley. I am married with two children under five and although I would be getting about 25% more in salary, the home prices are about 400% more in Silicon Valley than here in southwest Texas. Can you please provide some insight? Thanks.

Jason, Texas 6/30/06

A Dear Jason:

I speak to individuals contemplating the same question you pose several times a month. For people outside of the San Francisco Bay Area, they cannot understand a 3 Bedroom / 2 Bath; 1600 sq. ft. single-family home sells here upwards of $800,000. All I can say from a personal prospective the Bay Area is a great place to live and raise a family. Without sounding like a marketing piece published by a local Chamber of Commerce, the weather is great; we have an expanding job market highly trained professionals, etc., etc.

Likewise home prices in the South Bay continue to remain strong. In fact, I presented three offers this week on separate properties where multiple offers were involved. All three properties sold about list price. Each property was located in areas with above average school performance so that also influenced the level interest.

Ultimately home sales are influenced by supply and demand. We have very little vacant land so we’re unable to build more housing in the most desirable areas. Likewise our inventory of homes for sale continues to stay low (less than 1% of total homes) so we still have a Sellers market. Sure we are seeing some softening in homes listed about $1.5 million, yet these are not the homes someone like you can afford without a very large down payment.

I’m not sure this is the information you wanted to hear. Hopefully it provided some insight into the why behind our pricing. If you decide to move California – Welcome!!!

Tom Stynes 7/15/06

Translation: Dear Jason, prices in the Bay Area always go up. It’s the most special place in the world. Get a 40 year neg am mortgage and unlock that equity today! Besides, you’ll never need to go on vacation again!

Here’s an answer that was pretty good – until it became a Realtor answer:

Q Hi Tom, We are interested in demolition of our existing home in Cupertino and rebuilding a new home on the land. Cost of construction vs simply selling the existing home and buying another one (for larger size and other desirable features etc.) is an important consideration. Can you comment on the construction costs (per sq ft) and other costs, and point me to any resources that could help me to get started. Thank you very much.

Anonymous, Cupertino, CA 7/29/06

A Dear Anonymous: You ask a good question. Construction cost in the Cupertino area run between $200 and $350 per square foot depending on desired amenities. For resources, I would start by going to the Cupertino planning department. They will tell you the maximum limits on expansion, zoning requirements etc.

The next step would be to talk to architects so you can draw up plans for construction. If you want to contact me directly I can recommend several architects and builders in area.

The other option should you want to sell, please contact me directly. I recently sold a home in the Rancho Rinconada area of Cupertino. The property, potential tear down, sold “As Is” with seven offers well above the asking price.

Hope this helps.

Tom Stynes 7/29/06

Ah yes. A simple “$200-350 per square foot” answer became “btw, now’s a great time to buy! don’t get priced out!” answer.

Realty Times – Real Estate News and Advice
Silicon Valley Homes Lose $50,000 In Two Months
by Broderick Perkins

Silicon Valley’s median home price dropped 6.1 percent in the past two months, the largest such decline in three years, but when it comes to the dollar amount, the $50,000 loss over the two month period was the largest ever.

Granted, percentage-wise, a $50,000 drop from $800,000 is the same as a $25,000 drop from $400,000, but the dollar figures reveals that the higher prices go, the more room that have to fall.

The median price for single-family home prices came in at $770,000 in August, down $35,000 from July, which reflected a $15,000 drop from June, according to Richard Calhoun, real estate broker with Creekside Realty in San Jose and publisher of the Bay Area Real Estate Market Newsletter.

This can be explained by only one thing: they’ve started making more land in Silicon Vallley.

Does this house look familiar?

MLSlistings Property Detail for MLS number 630140
133 S 1ST ST
Campbell, CA 95008

$550,000
Pending: Continue to Show

This Single Family Residence has the following features:
MLS#: 630140 Approx Age: 90 Years Approx Sq Ft: 756
Detached Single Family 1 Story Cottage/Bungalow
1 Bedroom Ground Floor Bedroom 1 Bathroom

It should! It showed up on this site on July 20th… but back then it was $800,000!

This is a clear sign that Silicon Valley houses are now under appreciated!

If a house that’s fallen apart can’t sell for $800k… then something is seriously out of whack. I demand a Congressional investigation! This must’ve been rigged. After all, it’s special here!

Scott Y submitted this:

540 CHIQUITA AV, Mountain View Property Details – Mountain View Real Estate – Mountain View Homes for Sale – Movoto
540 CHIQUITA AV, Mountain View 94041

Bedroom: 2 Bathroom: 1 Square Footage: 1110 $824,900
Status:
Active
Year Built: 1948 List Date: 8/18/2006 Lot Size: 4791
Open: Sun 3:00 PM – 8:00 PM Parking Spaces: 1 MLS#: 652401
Ask a Question Neighborhood Data Comparable Sale Data Email this to a friend
DESCRIPTION -
540 CHIQUITA AV, Mountain View
140K Custom remodel by one of San Francisco’s hottest design and construction firms. New electrical, plumbing, drywall, kitchen, custom bath, bamboo floors, carpet, Florida room, built-ins. Best home in Mt.Vw for this price – flawless!

Scott had this to say:

Come on already. “Flawless” house and this is the BEST and ONLY photo they could come up with?

Geez… good god.

But here’s a red flag… from zillow:

06/30/2006: $710,000

Wait a sec… why would you buy it, spend $140k, and then only sell it for $824k? Aren’t you losing about 77k after fee?

Apparently this was in the most recent BusinessWeek :

Red means good, right?

This sure is a quaint little house…

MLSlistings Property Detail for MLS number 648556
185 FLORENCE ST
Sunnyvale, CA 94086
$605,000

This Single Family Residence has the following features:
MLS#: 648556 Approx Age: 96 Years Approx Sq Ft: 400

But here’s the surprise:

Yes, this 400 sqft house has a separate 2 car garage. Was this house originally intended for the chauffeur?

127 FARLEY ST, Mountain View Property Details – Mountain View Real Estate – Mountain View Homes for Sale – Movoto
127 FARLEY ST, Mountain View 94043
| Virtual Tour

Bedroom: 2 Bathroom: 1 Square Footage: 956 $699,000
Status:
Active
Year Built: 1950 List Date: 6/18/2006 Lot Size: N/A
Parking Spaces: 1 MLS#: 637248
Ask a Question Neighborhood Data Comparable Sale Data Email this to a friend
DESCRIPTION -
127 FARLEY ST, Mountain View
Beautiful 2BR, 1BA Mountain View house in great neighborhood close to it all! Immaculate, nicely upgraded and remodeled. 1 car attached garage. Corner lot! Back yard has room to expand. Won’t last long! 1st open house Sun, 6/25, 1-4

Does won’t last long refer to the structural integrity of the house? Is this house for people who have committment problems? “oops, my house blew away. well at least now I can get a new one!”

I saw this today…

The Washington Monthly

HAPPY LABOR DAY!….Courtesy of the Detroit Free Press, here’s a handy map showing how far median incomes have dropped over the past six years. And it’s good news for most of you: Compared to Michigan and North Carolina you’re not doing so badly after all. So stop your sniveling.

—Kevin Drum 1:46 PM Permalink | Trackbacks | Comments (243)

Oh well no wonder housing prices have gone up so much in California! Everyone knows that as median income falls, prices go up because of the magic housing fairy!