Good news, bad news for Real Estate in Silicon Valley
Santa Clara County foreclosures rise nearly fivefold; home values plunge – San Jose Mercury News
Nearly five times as many homeowners in Santa Clara County lost their properties to foreclosure last month than in July 2007, signaling theres no end in sight to the local mortgage crisis. Even many county residents not threatened by foreclosure saw their home values plummet in the second quarter, according to a report released Tuesday.[snip]
In the San Jose region, 38 percent of homeowners who purchased their property in 2005 owe more than what the properties are now worth; 46 percent of those who bought their homes in 2006 have negative equity and about 32 percent of those who acquired real estate last year are under water, according to Zillow.
Blah blah blah. Blah blah blah blah.
But this is the only part you need to read from this crappy biased MSM (Main Street Media) article:
But price appreciation in communities like Cupertino and Los Altos says as much about the stellar reputation of certain school districts as it does about easy commutes to technology companies.
[snip]
In Silicon Valley, though, the strength of home values can vary city to city, or even neighborhood to neighborhood. Downtown San Jose saw a 15 percent year-over-year drop, while East San Jose had a home-value plunge of 23 percent. On the other hand, Palo Alto and Cupertino, the headquarters of Apple, were each up 5 percent.
That’s right baby. The Real Bay Area is still going on strong.
Tada!
August 14th, 2008 at 12:41 pm
I think MSM = Main Stream Media.
True meaning: media that the writer disagrees with. A lefty considers Fox & Wall Street Journal to be MSM, a righty considers The Nation and MSNBC to be MSM.
August 14th, 2008 at 1:12 pm
Aww, its no longer free money to sign one’s name on a deed. Too bad, so sad. These poor poor idiots who thought home prices don’t go down…
August 14th, 2008 at 1:28 pm
SiO2, WSJ is actually excellent journalism, the problem with it is limited to the neanderthals handling the editorial page. Although since it was bought by News Corp I’m sure that excellent journaminimalism style we know and loath from Fox will work its way on in.
Many lefty sites use the term SCLM, or So-Called Liberal Media, to refer to sites that are center-right yet called left (they aren’t) by hard-righters.
August 14th, 2008 at 1:38 pm
The MSM thing is a long running gag on this, and some other housing blogs. It stems from a story where a Realtor was blaming the Main Street Media for causing house prices to stall in 2006.
August 14th, 2008 at 2:12 pm
Hah — good article burbed.
And yes, the RBA is still going strong.
I have a question for real estate investors, like RealEstater and WillowGlenner if they are reading this thread:
What form of mortgages did you take out/are you taking out now for your investment properties.
20% down 30 year fixed?
80/10/10?
Something else?
Thanks!
Zanon
August 14th, 2008 at 2:20 pm
RE is not an investor, he is a tech guy don’t you understand? When did he tell you he bought a house for investment?
August 14th, 2008 at 2:27 pm
RE is not an investor, he is a tech guy don’t you understand? When did he tell you he bought a house for investment?
———
Rick,
I bet he said it. He is not an average tech guy!
August 14th, 2008 at 2:33 pm
90 fixed, 10% down for me. But my properties are all conforming – not jumbo. I don’t buy expensive investment real estate. 10% down loans are readily available in the conforming loan size.
August 14th, 2008 at 2:38 pm
Right now I’m looking to buy an investment property between $700K and $1M in the RBA. Without exception, I use 30 YR fixed. Will put down whatever it takes to get regular conforming loan.
August 14th, 2008 at 2:41 pm
>>Will put down whatever it takes to get regular conforming loan.
To clarify, I will borrow no more than $420K.
August 14th, 2008 at 2:45 pm
What I see here is that WG put his money where his mouth is (he already bought a property). On the other hand, for last six months I am hearing that RealEstater is going to buy AN INVESTMENT PROPERTY.
August 14th, 2008 at 2:47 pm
hey hey WHOAH he lives in his investment.
August 14th, 2008 at 2:54 pm
>>On the other hand, for last six months I am hearing that RealEstater is going to buy AN INVESTMENT PROPERTY
I’m not competing for speed, but for accuracy. You only need to hit the sweet spot once to make it big.
August 14th, 2008 at 3:05 pm
RE, do you own any property now other than your primary residence? Because you have referred to all the properties you have bought. Are any of them investment property or were all of them your residence that happened to appreciate as well?
Where would you like to buy an investment home between $700-1000K here? Obviously not Palo Alto, but you could certainly buy Rancho Rinkydinky in Cupertino.
August 14th, 2008 at 3:35 pm
Man, a minimum of $280k down on an investment property? That’s a pretty high opportunity cost to overcome… RealEstater, are you really willing to bet that on the “RBA” now? (Assuming you can really find something suitable under a million in the RBA – maybe the question is moot, given that qualification.)
August 14th, 2008 at 3:49 pm
I’m not competing for speed, but for accuracy. You only need to hit the sweet spot once to make it big.
Spoken like a true gambler. Roulette anyone? Actually, your odds of hitting it big are likely better in a Vegas casino than buying POS Bay Area real estate right now.
August 14th, 2008 at 3:51 pm
hey hey WHOAH he lives in his investment
He invested in his own ass? Cause that’s where his head is.
Of course, in his world, his Porsche is a good long term investment.
August 14th, 2008 at 4:25 pm
LOL this is hilarious.
TNT, may I suggest:
Real speculator
Aspiring real estater
If now is a good time to buy what are you waiting for, RE?
August 14th, 2008 at 4:30 pm
pretty much anything you will buy will go up in price. Just look at what they cost in 1810. don’t worry about the price.the market does All the spots are sweet.
August 14th, 2008 at 4:41 pm
We always put 20% down with 30 year fixed. Though, we have lived in all our properties, except for one, for a number of years before we turned them into rentals.
August 14th, 2008 at 4:51 pm
Gosh, RE, I am disappointed. After the recent CONTINUE RISING RBA PRICES, what the heck have you been waiting for?! You’ve missed the right time to buy, I hear another “Priced Out Forever” “potential” investor here.
Steve is another example, he is also constantly “looking” but saying that RBA has been doing great. Is he looking to buy after RBA rises 50%? I sense a “momentum” RE investor here.
August 14th, 2008 at 4:53 pm
>>Palo Alto and Cupertino, the headquarters of Apple, were each up 5 percent.
Guys,
Take note. 5% in Cupertino/Palo Alto is a lot, given virtually everything is over a million. This is why I say accuracy is key. I’ve gained an equivalent of Bob’s annual salary just by living in my house, without having to pay any taxes.
August 14th, 2008 at 5:00 pm
Madhaus says,
>>Where would you like to buy an investment home between $700-1000K here? Obviously not Palo Alto, but you could certainly buy Rancho Rinkydinky in Cupertino.
I should be able to buy your house, with the contingency that the red guitar must come with it
!
On that note. I’m taking off to the airport for my vacation!
August 14th, 2008 at 5:10 pm
You can’t afford my house, it’s over a mil. And the red guitar is worth a whopping $500. Are you sure you can afford that, either?
Not sure why you’d want it, it’s not like you know how to play or anything. And it’s not that useful without an amp.
But why didn’t you answer my question? There are plenty of houses in Cup for under a mil, in the NE. In Rancho Rinconada.
August 14th, 2008 at 5:22 pm
Hey madhaus,
Sure he can, he is making $500 sitting on his ass for a couple of minutes, in his house. Except that he would need to loan that $500 to actually buy your guitar.
August 14th, 2008 at 5:23 pm
Other question RE didn’t answer is whether he owns any actual investment property. The answer is clearly no, or he would have said he did.
August 14th, 2008 at 5:27 pm
rick, RE seems like the type who would treat his house like an ATM and borrow against all the money he thinks he actually “made.”
Anyone who knows anything about investment knows you haven’t “made” any money until you sell what you buy.
I actually know someone who owns 38 Strats. I wonder if he considers them an investment or if he just feels he needs 38 different guitars, same model but different types, years, etc. to somehow be able to play everything. I also neglected to ask how many Les Paul models he owns.
The really sad thing is the guy got married, had a baby, and all 38 Strats are now in storage. He isn’t interested in storing some of them in OUR HOUSE where they will actually get used.
August 14th, 2008 at 5:36 pm
I’m not competing for speed, but for accuracy. You only need to hit the sweet spot once to make it big.
———-
Damn, more than six months? Is it so harrrrrrrrrrrrrd to get a “sweet spot” in RBA? I never knew that. In RBA home price appreciation is 15% (that’s what you said earlier, right?). So why looking for “accuracy”? Buy anything in RBA – it is going to be a great investment. Don’t get priced out forever in RBA, RealEstater. It’s great time to buy NOW.
August 14th, 2008 at 6:17 pm
wow, this thread became hilarious.
Real estater sure has some good experience in THE BIZ.
August 14th, 2008 at 6:54 pm
Guys:
I don’t know why you’re picking on RealEstater on this thread.
I asked a reasonable question: what loans are folks using in the RBA for investments, and I got reasonable answers: high LTV from WillowGlenner (10% down) and low LTV from RealEstater (borrow no more than conforming limit).
If that’s house houses are being bought, then I don’t think prices are going to go down in the real real Bay Area (not Willow Glenn) since there is no leverage there, but things may get sticking in Willow Glenn, with 90% LTV properties. That said, 90% LTV is not awful either.
-zanon
August 14th, 2008 at 10:26 pm
no you can’t use my 90% LTV to make assessments like that- because your question was about investment property, and I do not buy investment properties in WG. I only buy investment properties at about a 450K pricepoint, so that is the cheap areas. You can’t get a house in WG for that. Houses in WG have low leverage like many other expensive bay area locations, just because houses are expensive here.
August 14th, 2008 at 10:26 pm
I agree. RE gave a legit answer. I personally am a proponent of using as little down as possible, since your downpayment returns nothing and there is no downside risk if the property goes down provided the property is purchased as your primary dwelling, but not borrowing to the hilt and paying less interest over the life of the loan is certainly an investment strategy as well.
Of course unlike RE I think the RBA is bound to fall over the next couple years and wouldn’t buy at these price levels, but I digress…
August 14th, 2008 at 10:26 pm
zanon, I don’t think it’s the investors we need to worry about overall. It’s the idiot first-time buyers who didn’t bother to understand their mortgages, and the second- or third-time borrowers who just had to have that Hummer or exotic vacation who are losing their homes to foreclosure.
(Not even going into the general malaise in the lending market due to the hangover from the defaults and the near-death of mortgage-backed securities.)
August 14th, 2008 at 10:44 pm
An exotic vacation can be had for less than $5k for a couple including hotel and round trip. A fancy car can be leased (not that I think that much of Hummers). If your neighbor just had them, don’t jump too quickly to ready-made conclusions.
August 14th, 2008 at 10:59 pm
NOMADIC: I hear what you are saying.
What I’m interested in is how leveraged RBA property is. It’s very hard to get this info, as the loans would be Alt-A, not subprime, and Alt-A comes in so many different flavors that by itself, does not tell you much about LTV. Moreover, even if you knew the LTV of the original loan, there may be piggybacks or HELOCs that have increased that.
I must admit, I do not follow WG’s statement that expensive homes in the Bay Area are low leverage. Expensive homes in SF, to my understanding, have been 80-10-10 loans that have twice the leverage of your typical 20% down, 30 year fixed.
I also think that investment properties are important, as investors are the first to ditch them if (and it’s a big if) the become bad investments. A low LTV owner can ride out big price changes are not care, an investor cannot.
This article from Front Steps got em thinking about this.
http://thefrontsteps.com/2008/08/09/so-far-san-francisco-has-weathered-the-storm-better/
It makes a point that banks are asking for 25% down loans, and the presence of 80-10-10 are necc. to support the SF market in the $800K-$1.2K range, which is also prime RBA price range.
-zanon
August 14th, 2008 at 11:44 pm
DreamT those were just examples of ways to spend “equity.” Gotta say though, you’re a cheap date to take an “exotic” vacation for $5k. Or maybe exotic means something very different to you than to me.
zanon I really think WG meant HIGH leverage. Just doesn’t make sense otherwise, particularly when he says “… low leverage like many other expensive bay area locations.”
I remember being incredulous when I bought my last house and I learned it was possible to avoid PMI buy getting an 80/20 loan. It seemed like cheating to me! (I personally got an 80/10 but that was only because I hadn’t sold my old house before closing on the new one. I paid off the second and a large chunk of the first (loan) when I did close on the old house.)
The quest for LTV data seems to be the holy grail for this site.
August 15th, 2008 at 12:04 am
nomadic – exotic means “of foreign origin or character; not native”
Or are you just proving my point by prematurely jumping to conclusions?
For 5k you can discover the Philippines with your date and see EXOTIC places most people from Manila have never been to themselves, including the Mountain Provinces and its hanging coffins, or Palawan/El Nido and its underground rivers. You can scuba-dive among sunken ships. As long as you don’t fly first class or select the most expensive hotels, and pick trustworthy, recommended guides, it’s easily doable.
I realize this is cheap and probably not exotic enough by your standards. What’s a not-cheap, exotic vacation entails for you? Nude sauna on the Antarctic followed the next day by a Safari in Kenya?
August 15th, 2008 at 7:13 am
no, I meant low leverage to value. The expensive areas, and WG is one, typically have lower leverage due to the price of homes. People put more down. Its the east side where there is high leverage. I buy investment properties with high leverage, just because I want to maximize my investment.
August 15th, 2008 at 7:31 am
I must admit, I do not follow WG’s statement that expensive homes in the Bay Area are low leverage. Expensive homes in SF, to my understanding, have been 80-10-10 loans that have twice the leverage of your typical 20% down, 30 year fixed.
That is precisely what my banker friend (located in WillowGlen of all places) basically stated. He has access to information that shows just how leveraged homes in the more expensive areas actually are.
As I mentioned before, the housing bubble had its epicenter right here in Sillycon Valley. It was this area that began to experiment with I/O loans and Option ARMs long before it became in vogue in other parts of the USA.
Which is why I think the downturn will be longer and more severe right here. Because the duration of our upturn was longer than more areas, the duration of our downturn will also be longer. We are likely looking at 5-7 years of negative performance in real estate in the Bay Area. Including the `Real Bay Area`.
August 15th, 2008 at 7:54 am
A news report came out today pertaining to confidence levels in the private and public sectors concerning economic health. Basically, 26% of Bay Area companies expect to lay off employees.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/08/15/BUMV12B8HS.DTL
So, once again here’s more information that I think anyone trying to make a quick buck “investing” in real estate should know. Economics 101 tells you a few basic things.
A: The health of the economy is tied to jobs and healthy employment.
B: The ability of the consumer to spend determines economic growth-aka- housing, etc.
I totally agree with TNTinCA. The cooling effect will eventually reach the last remaining BA strongholds. If economic indicators have anything to do with the future, its that without a doubt, the prices in the RBA are heavily tied to the steady flow of VC money, which by the looks of things is drying up. Secondly, the bottom has not been reached yet, and won’t be anywhere close. Not by a long shot.
So RE, go for it- buy up a couple of houses, spin the wheel, see if you make some dough. If you do- that’s great. If not, then don’t say nobody warned you. Not that I believe what you’re saying anyway since I know for fact that you are indeed simply a real estate agent with no game.
August 15th, 2008 at 8:19 am
Hi Bob:
I agree with your pessimism, but I have to say, the VC industry is still flush with cash, and there is no sign of a downturn yet in the RBA.
We also seem to have two opinions on how leveraged the RBA is. WG says there is not much debt because:
1. People who buy here are rich
2. People who buy here have huge equity chunks from previous property
3. People who buy here have made loads of money in tech and put in a big downpayment (and I know some of those people)
4. People who own here have been here forever
All of which have some merit vs.
1. There seem to be at least SOME Alt-A activity here, all of which allow high amounts of leverage
2. There might have been HELOC activity also
But it’s not quantified.
WG’s says he buys his investment properties with high leverage to maximize return. I think this makes sense if you are an investor, as leverage + appreciation = high returns.
But, if there is a lot of investor activity in the RBA, collapsing credit will flip this cycle on this head. With just 5%-10% down, it does not take much to wipe you out.
-zanon
August 15th, 2008 at 8:29 am
I agree with your pessimism, but I have to say, the VC industry is still flush with cash, and there is no sign of a downturn yet in the RBA.
Oh-ho-ho… I don’t know about that. This is one area that I do have some expertise in, you might say due to my industry. Investors might indeed have the money to float startups and small companies. But I can tell you that investors these days are now being a lot more… conservative with their decisions due to none other than the questionable economic environment.
I think the rest of your assumptions are just that- assumptions, and if anyone looks at what the actual median income is in even the most pricey areas of Palo Alto- somewhere around 100k per household, then that gives you the real answer, and that answer doesn’t support current prices.
August 15th, 2008 at 9:21 am
More on VC –
The amount invested in U.S. venture-backed companies in 1Q08 was approximately $6.8 billion in 603 transactions, compared to $7.5 billion invested in 674 transactions in 4Q07. The amount invested in 1Q08 was the lowest amount of investment in a quarter since 4Q06.1
An industry sector analysis shows that the decline in venture investment was primarily in the healthcare sector, where $1.7 billion was invested in 142 transactions in 1Q08, compared to $2.6 billion in 182 transactions in 4Q07. Within the healthcare sector biopharmaceuticals was responsible for most of the decline.1
Acquisitions of venture backed companies in 1Q08 decreased noticeably, with 80 transactions totaling $7.8 billion, compared to 110 transactions totaling $15.7 billion in 4Q07. M&A activity in 1Q08 was also below the average of 102 transactions for $11.5 billion per quarter in 2007.1
IPOs of venture backed companies decreased to 6 companies raising $0.4 billion in 1Q08, compared to 25 IPOs raising $1.9 billion in 4Q07. This was the lowest amount raised from IPOs in a quarter since 2Q05.1
August 15th, 2008 at 10:42 am
About Alt-A;
part of Alt-A is stated income. There’s bogus/fraudent reasons to use stated income of course. But there’s two valid reasons:
1. in my experience, stock options and investment income do not count when the bank looks at income for full-doc loans. So someone who makes $150k/yr but also makes $30k/yr by cashing-in options, getting dividends, selling ESPP, etc will not get bank credit for that $30k/yr. But with a stated income it’s not a problem. This could be avoided if banks would look at tax returns and not just the income line on the W2, but in my experience that’s not what they do.
2. It’s a fairly common practice to buy the upgrade house, then sell the starter house. I’ve wanted to do this (but was getting outbid). Why would I do this vs selling first? The odds of finding an upgrade house within 1-3 months of selling are not good in CUSD/Saratoga/Los Altos as there’s really not that many houses for sale at any particular time. And I don’t want the inconvenience of selling, moving to a rental, then moving to the upgrade. (yeah, I’m a big whiner!) To use the equity in the starter house, you can get a HELOC. But from the banks standpoint, mortgage on starter house + HELOC on starter house + mortgage on upgrade house may add up to 60% of income. It’s a temporary situation but may still require an Alt-A. But after selling the starter house maybe it’s only 25-30% of income, as the LTV is only 50% or so based on the equity from the starter house.
So, I wonder what %age of Alt-A stated incomes are purely bogus (end situation with 60% of income) and what %age is due to income from stocks, or the temporary situation. I have no idea, but I think we could agree that it matters.
August 15th, 2008 at 10:52 am
Lionel & Bob: I agree with you that there have been almost no IPOs, and VCs are leery of investing.
But, VC money is not leveraged (unlike private equity). So in a credit contraction, it’s not going to go anywhere. Also, I tried googling for the numbers, but the total amount of funds allocated in VC is still high — but I don’t know if it’s higher or lower than in ‘98.
BOB: Your point about home price/income is correct, but also incomplete. You also need to know how leveraged the asset is to see what $100K/year can support. Look, I’m a big believer in price/income too, so we fundamentally agree, but you also have to recognize that while other parts of the Bay Area have experienced dramatic price declines, the RBA has not. This is just as true as the deviation from historic price/income ratios!
Given that the price rise, and decline, was driven by credit expansion and contraction, I think that knowing how much credit (debt) underlies RBA prices will tell us more about where prices will go than price/income alone.
Look at it this way. Suppose there were hardly any sales in RBA during the run up. Prices were set by those who bought last, maybe some tech guys who get rich off their IPO. Everyone else is sitting on an enormous equity cushion as their 2BR/2BR in PA went from $200K to $1M. Do you think they care if their home now falls to $800K? Or even $700K? They do not care because their home is primarily financed by equity, not debt.
OTOH, suppose there were a fair number of transaction, and those transactions were financed by high LTV mortgages, like IO, 80-10-10, and various other flavors of high LTV Alt-A. They care *a lot* if their $1M home falls to $900K, because now they’ve been wiped out. If they were an investor banking on appreciation, as cash flow is clearly very negative in RBA, then they need to get out of this losing position fast.
I have no idea how leveraged the RBA is.
-zanon
August 15th, 2008 at 11:08 am
“But, VC money is not leveraged (unlike private equity). So in a credit contraction, it’s not going to go anywhere.”
Yet it appears to be contracting.
August 15th, 2008 at 11:50 am
#30, I just love poking on him, no insult like some others have done. Is that a crime?
One reason is that he just owns one property (his own home) and claims to be an investor, and has been giving investment advices on RE, and he thinks his wisdom on RE even beats out Warren Buffet.
August 15th, 2008 at 11:54 am
Rick,
You are an “amateur types”. Just shut up.
August 15th, 2008 at 12:07 pm
SiO2 #44 – The move-up strategy quandary you describe is very real. I also think the fear to be saddled with an old house that is not selling quickly enough might cause some move-up buyers to delay the purchase. If that is the case, once sales pick up in their old neighborhood, prices in destination neighborhoods will climb higher still due to the new influx of buyers. That’s another variable that is pretty much impossible to quantify but I believe will have a real effect.
August 15th, 2008 at 12:21 pm
There’s an awful lot of factors that can also determine if or when an area could potentially lose value, one of which would be to see what the mix of housing selling is. I know for fact that as last as early this year, Marin had a very similar pattern the the RBA: Home prices were flat to showing a single digit increase. The mix of housing was such that the extreme upper end was still selling but not much of anything else was. As of now, Marin is now negative. It seems like the same pattern is repeating in the RBA, with very slow to flat growth, while the areas around it get pummeled. So we’ll have to see.
In any regards, I’m still a firm believer in history, and by and large, income versus cost does generally come back inline with a bust of which the RBA hasn’t experienced yet.And again, I’ve seen areas that were seemingly invincible to the bust go belly up all across the Bay Area time and time again. I don’t see why the RBA would be excluded.
August 15th, 2008 at 12:37 pm
SiO2,
Ben’s bubble blog is full of stories every single day where families bought a new house before selling the old house and are suddenly up Sh!t creek without a paddle because wouldn’t you know?-they can’t sell the old house either. Just for safety’s sake, I’d strongly suggest renting after selling, then buying. Sure- it might be an incovenience, but worth it in order not to be ruined financially, that is unless you can easily afford two mortgages. Just my personal opinion…
August 15th, 2008 at 12:57 pm
If buying a house nowadays is as much a gamble as it ever was, selling the old one in a timely manner ( < 2 months) is probably way more of a gamble. In that I agree with bob, for once.
I believe there are rental places out there that specialize in this kind of transition, where you’re not expected to sign a 6-month or 1-year lease. I drove by such a place on Saratoga Ave. in San Jose.
August 15th, 2008 at 1:12 pm
Bob and DreamT, thank you for the advice. I’m not actively buying right now as the “RBA” target areas have not gotten cheaper. for now at least my neighborhood in SJ still has houses going pending in one month as long as they are reasonably priced, but I definitely am keeping an eye on this in case RBA falls in price and there’s a buying oppty.
The other drawback to the sell then rent strategy is that I would feel more pressure to win the bidding war for a particular house. Which in the long run would probably be ok but would make me unhappy while signing the papers.
nonetheless it is well thought out advice, thank you.
August 15th, 2008 at 6:12 pm
They care *a lot* if their $1M home falls to $900K, because now they’ve been wiped out.
Sure of course everybody cares if they lose $100K on a house, but they still have a place to live and a mortgage payment that is probably only slightly more than they’d have to pay to rent here.
August 15th, 2008 at 6:53 pm
DreamT, I wasn’t disparaging your vacations (#37). To me, exotic also means luxurious. Coming from a rather modest upbringing, that is foreign to me as well. Given that I take a “real” vacation every five years or so, I make sure it’s a treat (by my definition).
August 15th, 2008 at 7:01 pm
It’s a bit out of date, but here’s some of the VC data you may be interested in:
http://www.viewfromsiliconvalley.com/id112.html
August 15th, 2008 at 8:08 pm
No joy getting the loan info from Mr. Mortgage. He snippily told me that was covered in his previous articles and that I was asking too many questions for 1 email. NO. IT. WAS. NOT. COVERED. ANYWHERE. Not at the neighborhood level.
TNTinCA, would your banker friend be willing to share some observations here about whether the RBA loans are any less leveraged than the cheaper zips?
August 15th, 2008 at 10:45 pm
nomadic – luxurious? well your previous comment makes sense. I’m from a very modest upbringing as well but discovering exotic cultures and places is more appealing to me and much more of a treat than some lights and sparkles. My previous job sent me to the world’s best hotels, and while it’s a nice experience each time, I wouldn’t call it enriching.:)
You know what they say about luxury: you get used to it so quickly that you feel emptier after than before.
August 15th, 2008 at 11:09 pm
WG, seriously, if you can provide some information of the cash positive opportunities you are talking about. That will help everyone, RE might finally be an investor, and some of us might shut up and even buy something. That is good information and educational.
August 16th, 2008 at 9:47 am
Lionel and all, how about a real source for all your hyperbole? There are no IPOs, but there is more M&A than ever, even past the dot com era. So its not like nobody can cash out. In fact I would argue an acquisition is actually better than an IPO for a startup.
http://www.bloomberg.com/apps/news?pid=20601170&refer=home&sid=aQZFFShsmkxk
Quattrone is plunging back into the fray at a dismal time for what he knows best — IPOs. Through July 28, 383 companies went public worldwide, down from 702 a year earlier — the slowest pace since 2003, according to data compiled by Bloomberg. There were no venture-backed IPOs in the U.S. during the second quarter, the first time in 30 years such a period passed, according to the National Venture Capital Association and Thomson Reuters Plc.
Today, Quattrone’s best opportunity lies in M&A advice. The U.S. technology industry has produced 60 deals of at least $1 billion apiece in the two and a half years ended on June 30, Bloomberg data show. The deals sport an aggregate value of $280.5 billion, topping the glory years of 1999 and 2000 when companies carried out 83 like-sized transactions valued at $265.7 billion.
August 16th, 2008 at 10:13 pm
WG, I wrote that VC appears to be contracting. Hardly hyperbolic. What amazes me is that people in SV can’t understand that, as the rest of the country falls into a recession, there will very likely be fewer consumers of software and hardware. RE was crowing about how much better SV was than Wall Street, citing recent layoffs in NYC. Who do you think is a primary consumer of computer products? Personally, I’d feel a whole lot better being short Google right before 3Q earnings come out than long. No hyperbole, just noting that we’re in for rough times.
August 18th, 2008 at 8:49 am
SiO2,
I guess I’m a little confused as to why you would be under more pressure to make an offer on a house if you were renting. If anything, it would actually enable you to take your sweet time finding a home that’s within your desired price range. If you found one and lost the bid- oh well, its not like people don’t sell homes in the RB all the time. Hell- people sell houses here like groceries. So by renting, the equation would be in your favor. Renting seriously isn’t a death sentence. I’ve done it for over 10 years. Just imagine how many houses have sold since then.
I look on Craigslist Nashville, Austin, and Raleigh every other week, and have done so for 4 years. Every single time I look, there are probably 5-10 houses that I could buy right now and are actually really cool houses. One was a 1860’s two story log cabin with a large yard for $160,000. I was really tempted. But guess what? Every time I look, there’s always a few that are also really awesome. So if there were cool houses 4 years ago for sale, there will be equally nice ones for sale in 4 more. The same goes for here: there’s no rush. Take your time.