February 17, 2009

$1.5 million dollar house becomes a $848,000 house

Many many moons ago…

$1.5 million dollar house rents for $3975 a month | SF Bay Area Home Price and Mortgage Insanity Blog – Burbed.com
July 11, 2007
$1.5 million dollar house rents for $3975 a month

Burbed reader E.V. spotted this:

Huge 6bed/5 1/2 bath Executive Home in EAGLE RIDGE COUNTRY CLUB
$3975 / 6br – Huge 6bed/5 1/2 bath Executive Home in EAGLE RIDGE COUNTRY CLUB (gilroy)
Reply to: hous-370156683@craigslist.org
Date: 2007-07-09, 2:28PM PDT

THIS HOME HAS IT ALL…Only 6 years old, it is loaded with two balconies, one that looks over a Pond on the 5th. tee.

Professional Kitchen with cherry wood cabinets throughout, Viking 6 burner stove, Sub-Zero refridgerator, with no home on the back or side yard.

Brand new swimming pool, tennis courts, elementry school, 8 1/2″ crown moulding and wainscoteing everyware.

Hardwood floors granite kitchen and each bedroom has its own private bathroom.

Beautiful views of every room in the home.

This home would sell for $1,500,000 but we have decided to keep it for the young children when they become adults. AVAILABLE AUGUST 1st.

Call for a private showing at 408/210-7740 and ask for Pierce.

2420 muirfield way, gilroy, ca 95020 at club drive at santa thersa ave google map yahoo map

Since then, a lot has changed. Gilroy is no longer in the Real Bay Area. Strawberry and Garlic pickers are no longer being offered $700k mortgages.

Long time Burbed reader E.V. recently notified me of this listing:

461978652_2420

Egads! Sorry Gilroy – it looks like your readmittance for Real Bay Area status is not likely for 2009. Perhaps 2010?

Comments (86) -- Posted by: burbed @ 5:20 am

86 Responses to “$1.5 million dollar house becomes a $848,000 house”

  1. zanon Says:

    Too true! In Palo Alto, $2M rent for $2-$3K/mo.

    Now *that’s* RBA!

    At $848K though, the house is essentially cash flow positive at ~$4K/mo. Unless Gilroy rents fall further, it is now correctly priced.

  2. Herve Says:

    > This home would sell for $1,500,000 but we have decided to keep it for the young children when they become adults.

    Look kids how your parents screwed up! :-)

  3. Herve Says:

    I see the Dow Jones is doing quite well today! It’s getting close to 7,500 now.

  4. Joe Says:

    Wow, $186/sq.ft. for this mansion!

    At 4,561 sq. ft. you could probably squeeze 8 – 10 families in this beauty and with a rent of $4,000 per month, that would come out to $400-500 per family. Definitely reasonable in this economy.

    I’m surprised this property is even being listed, why wouldn’t one of those investor realtor types snatch this one up right away????? Loss of confidence….

  5. sonarrat Says:

    Gilroy and Morgan Hill are full of these elephant houses. On my parents’ block in Morgan Hill there is a 5,000 square foot 5/4 mansion with a dumbwaiter and a panoramic lake view for $1.2M. The original owner was a Realtor who maintained the elaborate landscaping meticulously.. they sold it to a white trash family that had come into money for $1.3M. They put 20% down on a jumbo ARM. Then the wife turned in the guy for illegal firearms and Grandma, who had bankrolled the thing, is now selling the house at an apparent loss. Meanwhile a three-level, 3,600 sf house across the street purchased in 2006 sold as a short sale. The sky isn’t falling yet for them, but they’re feeling a pinch.

  6. nomadic Says:

    Did you guys hear about the guy on “Wife Swap” who epitomizes all that is wrong with the attitude of RBA snobs? Take a look for a laugh:

    http://valleywag.gawker.com/5148821/wife-swap-star-apologizes-for-having-worst-husband-in-world

    He isn’t even from here. :-)

  7. Real Estater Says:

    nomadic says,
    >>Did you guys hear about the guy on “Wife Swap” who epitomizes all that is wrong with the attitude of RBA snobs?

    Sorry, smart people don’t waste time on reality shows.

  8. Real Estater Says:

    Herve says,
    >>I see the Dow Jones is doing quite well today! It’s getting close to 7,500 now.

    Good opportunity to buy the index at this level and hold for the long term. Down side is limited from here.

  9. Justin Sane Says:

    #4, Joe, I don’t see a listing. The number is a zestimate. The house is not on the market.

  10. steve Says:

    Good opportunity to buy the index at this level and hold for the long term. Down side is limited from here.

    Does that mean you are now all in? Or, are you still holding cash for that second home purchase?

  11. mike Says:

    RE says,
    >> Sorry, smart people don’t waste time on reality shows.

    How you would know what smart people do?

  12. anon Says:

    “Sorry, smart people don’t waste time on reality shows.”

    LOL – how would you know what smart people do?

  13. anon Says:

    LOL

  14. Real Estater Says:

    Steve says,
    >>Does that mean you are now all in? Or, are you still holding cash for that second home purchase?

    If you really want to know, here it goes.

    I have two buckets. One is 401K and IRA money; the second is my regular cash/stock accounts.

    The second bucket is 99% in cash, and won’t be touched. For the first bucket, I bought index when the market was last at this level (around Nov ’08, if I recall0. I’d be buying again when it falls below my last purchase. I expect to bring my stock holdings to 50% of the second bucket. Basically, it’s a very systematic way to invest. Takes the emotion out of it completely.

  15. UnrealAlex Says:

    That golf course is going to make some damn fine farming land, using permaculture techniques, it will be very productive. And yes, this McMansion can hold a whole small tribe of people.

    You ought to see the garlic we grow here! Hee-yuge! This has got to be one of the very best places in the BA to live, we have the railroad, stuff grows great, good rainfall (as you can see if you’re in this area right now) it’s the new Palo Alto of the new economy.

  16. A. Lewis Says:

    I think most reality shows are a waste of time, but they are tempting. Didn’t watch this one, but it’s not surprising this was the content.

    But let’s give the one shred of credit to the big loser-guy in that article – he apologized, abjectly, and withdrew from the boards he served on because he didn’t want them tainted with the idiotic attitudes he displayed on national television.

    http://renee.personallifemedia.com/2009/02/06/a-message-from-stephen-fowler/

    Admitting he was wrong puts him one full notch above most people I criticize. There are so many examples, but I don’t want to get personal or political.

    But let me be clear – he was very very wrong. Let’s hope he learned something.

  17. Real Estater Says:

    No wonder America is going downhill, with people eating junk food and watching garbage shows on TV.

  18. sonarrat Says:

    Sorry, smart people don’t waste time on reality shows.

    I think it’s time for you to come down from your palo alto (high tree).

  19. A. Lewis Says:

    if you want a serious, but unfortunately not optimistic view of the global economy, try this:

    http://baselinescenario.com/2009/02/08/baseline-scenario-2909/

    I would tend to agree with RE that there doesn’t seem to be much downside left in the stock market when the DOW hits 7500. That’s a ‘magic’ number I made up for myself last fall, and I’m surprised we’ve almost hit it for the second time (wouldn’t be surprised to see a 300 point upwards bounce tomorrow as a ‘correction’ – DONT TAKE THAT AS INVESTMENT ADVICE).

    But I do worry. The potential downside is 7500 more. Pretty unlikely, I would think, but all these big zombie banks not working their way out of things, and the threat of sustained short-term deflation increasing, is a bother. Then, once fear spreads widely enough that everyone buys 30-year treasuries yielding 2%, we’ll end up with high inflation and they’ll all get killed that way.

    The upside is 20 years of much less than optimal growth. And we all lose – angry renters and homeowners and rich and poor alike.

    We need a more concerted global plan of action, because otherwise, as I think zanon pointed out – people will stay scared and just want to save for a long time. That long time of huddling at home with what cash you can scrape together is almost the opposite of a healthy growing economy. At least people will come out of that scenario with low debt…but there’s better ways to get there.

    The housing market will not do well under the deflation/stagnation scenario, either.

    The prospects of a short, V-shaped recession ending in the 2nd half of 2009 are now less than 10%, IMHO.

  20. Justin Sane Says:

    Reality shows have nothing to do with reality. People are putting on a show because they know they are on teevee. It says absolutely nothing about how he would act in real life.

    IMHO

  21. mike Says:

    RE says:
    No wonder America is going downhill, with people eating junk food and watching garbage shows on TV.

    Presumably you don’t do either.

    What’s your excuse?

  22. Joe Says:

    >>#4, Joe, I don’t see a listing. The number is a zestimate. The house is not on the market.

    Very true. But this one in the area is available:

    http://www.redfin.com/CA/Gilroy/2340-Young-Toms-Ct-95020/home/1788744

    2340 YOUNG TOMS Ct
    Gilroy, CA 95020
    Price: $875,000
    Beds: 6
    Baths: 4
    Sq. Ft.: 4,535
    $/Sq. Ft.: $193

    History:
    Feb 03, 2009 Relisted
    Feb 01, 2009 Off Redfin
    Jan 10, 2009 Relisted
    Dec 10, 2008 Listed $875,000
    Oct 24, 2008 Sold $1,227,792 -8.6%/yr Public Records
    Jul 11, 2005 Sold $1,653,000 — Public Records

    Nice haircut on this one, curious what it will sell at.

  23. nomadic Says:

    FWIW, they were discussing the “SF attitude” on KFOG this morning on the way to work and referenced that man’s atrocious outburst. I can give him some credit for owning up to his behavior, unlike the certain clowns on Wall Street who continue to point fingers.

  24. Joe Says:

    The Zestimate of our featured property is now $792,500.
    http://www.zillow.com/homedetails/2420-Muirfield-Way-Gilroy-CA-95020/50895038_zpid/

    These home prices are falling like rocks…

  25. A. Lewis Says:

    Want another preview of the RBA? Before you read the link, keep in mind that I always give the caveat that my prediction for a correction in the RBA can be achieved either through a long period of stagnation, or actual price drops. I can’t promise you which.

    But in the very ‘special’ community of Laguna Beach, CA, the high-end ($1M+) foreclosures happened all of a sudden:

    http://southcoasthomes.freedomblogging.com/2009/02/17/soco-city-with-most-high-end-foreclosures-its-laguna/

    A year ago, they had only had 2. Now – 37. These are seriously good locations – beach front and beach adjacent properties. I’m sure there’s a vocal community in Laguna Beach trying to explain away this or that property (“…you only have walking access to 1 of the 5 best art galleries in that crappy place! Who’d wanna live THERE?” etc.), but the foreclosures happened.

    What do you think – are the owners in a place like Laguna Beach such uncaring cynics that they’d walk away from their properties as soon as they got underwater? Because they didn’t care about their homes, or like the schools and location enough?

    Not like the fine folks in the RBA, right? The RBA folks will stick it out no matter what. And if they won’t, there will always be another eager buying willing to pay full price.

  26. madhaus Says:

    I want today’s house. It has wainscoteing. So much classier than the untrendy and boring wainscoting found up the tall tree.

  27. A. Lewis Says:

    Signs of additional weakness in my El Cerrito golf course place:

    http://sfbay.craigslist.org/eby/apa/1037374278.html

    Title of the listing now says the rent is $7500/month – but the image in the listing still show sthe $8800/month they had it for before!

    It’s the time and effort from your Realtor(tm) that really makes it worth paying them commission.

  28. Real Estater Says:

    >>But in the very ’special’ community of Laguna Beach, CA, the high-end ($1M+) foreclosures happened all of a sudden

    We just had a Manhattan Beach guy here talking as though his town was special. Let’s get real here. None of these “name your beach” communities in Southern California are that “special”. They are nice places, but don’t qualify for “special” as defined by RBA standards. There’s absolutely no industrial/entrepreneural base in Laguna Beach other than art. Who is going to put a priority on art during a recession? On the other hand, the RBA folks definitely do not want to be in any other place right now, because relatively speaking this is the high wage, high employment mecca of the nation.

  29. Real Estater Says:

    Bought S&P 500 Index today (Pralay don’t forget to track the date).

    This recession represents a huge opportunity. The formula for success is straightfoward: Whoever comes into it holding cash and leaving it fully invested (in real estate and stocks) will be a winner.

  30. nobody Says:

    http://www.burbed.com/2008/12/02/the-bottom-has-been-reached-in-the-palo-alto-real-estate-market/#comment-33106

    (whistling in the wind)

  31. nomadic Says:

    oops. :-P

  32. A. Lewis Says:

    Your knowledge and judgment of the “name your beach” communities is…fascinating.

    I disagree with you – I’ve been to Laguna Beach many times (lived 15 miles from it for 2 years), and it’s a very special place. One of the elite towns in Southern California. You can tell from the high prices and the crowding on the tiny amount of good land close to the beach.

    Good luck with your S&P 500 purchase – index funds are an excellent way to go. I myself am dithering about making an addition to my Roth IRAs…but I’m not sure I want to shift cash towards retirement rather than real estate in the next five years.

    I totally agree with you about a recession as a huge opportunity. Obviously, one wants to buy low and sell high. Curious how you suggest people come INTO the recession holding cash. Why were they in cash? Did they time the market and sell high at the last peak of real estate or the stock market? How did they know they were at the peak?

    Thanks for making my point – when stocks are down 50%, they represent a much more attractive investment then at their 100% peak. It’s a better time to buy.

    Your exact same logic applies to housing. It’s a much better time to buy good houses in places where prices have dropped 50%. If good houses in other places are at or near their peak, it’s just not as attractive. Hence, it’s not a good time to buy there.

    It’s hard to time the bottom precisely – today might have been the low for 10 years (or forever)in the S&P 500, or close to it. Or it might drop another chunk.

    But it’s pretty easy to guess when you’re closer to the peak than the trough – which is where RBA housing is at.

  33. madhaus Says:

    nomadic, on the Internet, nobody has your avatar.

  34. A. Lewis Says:

    nomadic, I just can’t see – what the heck is your avatar?

  35. Real Estater Says:

    A. Lewis says,
    >>I’ve been to Laguna Beach many times (lived 15 miles from it for 2 years), and it’s a very special place.

    We can agree on the following: It’s a great place to live if you don’t need to work.

    >>Curious how you suggest people come INTO the recession holding cash. Why were they in cash? Did they time the market and sell high at the last peak of real estate or the stock market?

    Majority of the people wouldn’t have gotten it right, but let me say this in hindsight: Early last year, when I announced that I liquidated my stock portfolio, folks here should’ve taken it very seriously.

    >>Your exact same logic applies to housing.

    You should not equate housing to the stock market. In fact these two investment vehicles have little in common. With real estate, you want to buy for the long term. With stocks, you can’t be on auto pilot. If you were to simply “buy low” in real estate, you would’ve lost your shirt, because the lower tier areas have dropped 50% in a year in some cases.

  36. Real Estater Says:

    >>nomadic, I just can’t see – what the heck is your avatar?

    Looks like a bunch of Lotto tickets.

  37. A. Lewis Says:

    If you’re advocating people buy stocks for the short term only, the ultimate form there is day-trading. That’s a stupid strategy. And I use such strong language only to encourage others to avoid it. Please don’t lose a ton of money day trading, people. Go to Vegas first – at least you’ll enjoy yourself for a while.

    >>>If you were to simply “buy low” in real estate, you would’ve lost your shirt, because the lower tier areas have dropped 50% in a year in some cases.

    First of all, if you bought low, you wouldn’t have lost your shirt. Let’s say a crappy place in San Jose cost $80k in 1995 at a ‘low’, and it bubbled to $500k in 2007, then dropped to $250k now. You’re still OK. Buying it in 2007 is when you lose your shirt.

    Second, the DOW has dropped about 50% from it’s peak over 14,000. You would have lost your shirt that way, too. What on earth is the point you are trying to make?

    Lastly, I don’t equate the stock market with housing beyond describing each of them as potential investment vehicles. Certainly, nuying for a primary residence is a different behavior than buying for investment.

    I merely stated that your logic, as stated, applies to housing. That doesn’t imply anything else applies. Nice try.

  38. nomadic Says:

    I was thinking earlier today that I need to find a better avatar. It’s currently a photo of the packets of Flavor-Aid on the site I used to have in my signature.

    Subliminal message: drink the Kool-Flavor-Aid; be my bag-holder. ;-)

  39. Lionel Says:

    I think we’re headed down to the 6,500 or so this time down, then a sucker’s rally (based on some ridiculous government intervention), then down again to the 4′s. Even at this level we’re only at 2003 numbers. We haven’t dialed it back far enough. All GDP growth since then 2000 has been debt generated. Our economy and the world’s economy are sucking fumes. A. Lewis, I always enjoy your comments, be careful with the market. RE, follow your instincts, go all in.

  40. Real Estater Says:

    >>RE, follow your instincts, go all in.

    Will buy more at 6500, and should be all in by the 4′s.

  41. steve Says:

    Will buy more at 6500, and should be all in by the 4’s.

    I’m still confused by this strategy. Why isn’t it all in now at 7500? If you are saving some for 6500 (not unreasonable), why wouldn’t it go all in then? If you really saving some for “the 4′s” how could you possible think that real estate would be a sound investment over this period?

  42. burbed Says:

    Hm, the temperature on Burbed seems to have reached “beyond spicey” again.

    Can y’all do me a favor and try this experiment for the rest of the week: please don’t mention other commenter’s names – only post number?

    Thanks.

    Be cool, stay cool(TM).

  43. steve Says:

    #42, I assume you meant to drop the “time out” on the tax fraud thread? :)

  44. steve Says:

    oops, I see poster of #42 already did. carry on…

  45. R Says:

    I invested a small amount of my IRA in SSO (2x S&P 500) today. I think in all likelihood the market is headed lower, perhaps significantly lower, but I won’t be cashing out of my IRA for 30 years so long term, I’ll double up the S&P. I am mostly still in cash though, with a few high-yielding stocks mixed in. If we drop to 6500, I’ll put even more in. Like A Lewis, I was debating whether to make my IRA contribution as opposed to keeping more cash for a downpayment but decided to max out my contribution. Just hate losing whatever the 5k will be in 30+ years.

  46. Real Estater Says:

    I’m really confused by #41, so I won’t respond until I hear a clarification.

    #45: I agree with your approach. If the market bounces back, you make money. If it drops, you have the opportunity to make even more money. That’s what I was trying to explain to Steve.
    I see that you’re trying to buy a house too, despite various arguments to the contrary. At the end of the day, that’s what we all want.

  47. R Says:

    “I see that you’re trying to buy a house too, despite various arguments to the contrary.”

    I’ll begin to look seriously when prices drop another 10-20%, which will bring prices close to in line with income levels, historical prices, and area rents, and not until then. Right now, it makes no sense to buy because renting is much cheaper and prices are headed lower. We’ll see how quickly the market on the peninsula drops. Perhaps I’ll be looking around the end of the year, perhaps next year, we’ll see. I’m in no hurry and don’t plan on catching a knife. But to address your comment, I would not recommend buying in the RBA right now. Prices are just starting to drop.

  48. steve Says:

    #45, I’m not sure what could be confusing about post #41, but I will try to clarify

    You are a stock market timer. You sold at a great time (14,000 or so) and you were happy to buy some back at 7500. However, you think there is a good chance that the market will fall to 6500 (pretty smart) and possibly lower (“the 4′s,” presumably the 4000′s). Am I correct so far?

    So, my question is, if the above is correct (that we might touch “the 4′s”), how can you possibly think RBA prices are headed up this year? If the above is not correct (and 7500 is the bottom as we are poised for a quick recovery), why didn’t you go “all in” today?

  49. steve Says:

    oops, should read #46, not #45. I’m gonna suck at the new system.

  50. Real Estater Says:

    #48,

    No one has a crystal ball when it comes to the stock market. I feel that 7500 is a good point to start the dollar cost averaging. I hope that clarifies it.

  51. sonarrat Says:

    “Dollar cost averaging” means buying steadily at regular intervals no matter whether the market goes up or down, not cherry picking times to buy based on perceived value. What you’re doing is called “catching a falling knife,” buying while the market is still going down with no end in sight thanks to the glut of bad economic news scaring people away. It may be justified, but don’t try to pass off your strategy as dollar cost averaging when it isn’t.

  52. MV_Bound Says:

    RE #28- You don’t get it. I never said that I thought “my” town was special. That’s the thing, nothing is special. Take a step back… Yes, RBA has entrepreneurial activity, but without financing that will and is taking a hit. And yes, you are right there is no money in the entertainment industry which makes up a pretty good chunk of MB residents, along with athletes, PE/VC guys, etc. Hmmm, somewhat similar to the RBA don’t you think? After all, you were the one that told us that Steve Young lives in PA.

    Steve- RE will continue to dollar cost average all the way down. Good strategy there!

  53. Real Estater Says:

    sonarrat Says:
    >>“Dollar cost averaging” means buying steadily at regular intervals no matter whether the market goes up or down, not cherry picking times to buy based on perceived value.

    Call it Enhanced Dollar Cost Averaging if you will. The way I see it, the term “Dollar Cost Averaging” has no time element in it, only dollar and cost.

    >>What you’re doing is called “catching a falling knife,” buying while the market is still going down with no end in sight thanks to the glut of bad economic news scaring people away.

    What you fail to realize is that the risk/reward ratio is very favorable. I re-emphasize the entry point is Dow 7500. Stocks are very cheap at this level. If it goes to 4500, I can achieve an average of 6000. I’ll take that any day. If it simply bounces back to 7500, I would achieve a 20% gain. More likely, you see the Dow at 12000 again within 10 years, which means I’ll double my money.

    In any case, looks like the Dow is up today, which is OK with me as well.

  54. Real Estater Says:

    One final point. Notice I’m buying with my 401K money, which means it can’t be withdrawn until retirement. If you don’t believe the Dow will be well above 12000 by the time you retire, you might as well not do 401K.

    Majority of the people already invested their 401K funds in the market; they are the ones getting killed by the falling knife.

  55. Real Estater Says:

    MV_bound,
    >>And yes, you are right there is no money in the entertainment industry which makes up a pretty good chunk of MB residents, along with athletes, PE/VC guys, etc.

    I’m sure there are folks in the entertainment industry there, but the heavy weights are in Beverly Hills and Malibu.

  56. R Says:

    “Call it Enhanced Dollar Cost Averaging if you will. The way I see it, the term “Dollar Cost Averaging” has no time element in it, only dollar and cost.”

    I think you need to look up the definition of dollar cost averaging. Dollar cost averaging has a time element to it, that being the fixed interval (monthly or quarterly) when you contribute irrespective of market conditions. Contributing sporadically when you think the market is low, while perhaps a good choice, is called trying to time the market, which is the complete opposite of dollar cost averaging. If you are going to start dollar cost averaging now, you have to invest at fixed intervals without fail regardless of what the market does. Doing anything else defeats the purpose.

  57. MV_Bound Says:

    RE #53- While I am optimistic, many could assume that the DOW might not be 12,000 within the next 10-12 years. Take a look at SPY, which tracks the S&P 500 Index of which I could assume many here have at least a portion of their 401k funds invested. We are back at Jul 1997 levels. Just something to think about…

    Date Adj Close*
    17-Feb-09 79.22
    31-Jul-97 80.17
    30-Jul-97 80.25

    Also, I’m not just talking about celebrities, they will live in BH, Malibu, Calabasas, Hollywood Hills, for the privacy, but plenty of executives reside in MB. Again, the comparison to RBA is pretty similar. But, I’ll concede that the RBA is a little more diverse and there is more money, but just don’t be too confident.

  58. Real Estater Says:

    R,

    The people who follows the conventional dollar cost averaging are the real knife catchers now. As I mentioned before, I’m not a big fan of stocks, but I am opportunistic enough to join any party when there’s value on the table.

  59. Real Estater Says:

    Another great article by Kiyosaki:

    http://finance.yahoo.com/expert/article/richricher/142228

    The worst of times are the best of times!

  60. R Says:

    “The people who follows the conventional dollar cost averaging are the real knife catchers now.”

    Perhaps, but the point is that what you (and I) are doing by purchasing when we think the market is down is not dollar cost averaging, it’s market timing. Right now might be a good time to try the approach, but over the long-haul, market timing is been shown not to be an effective strategy because you miss the bottom rally and don’t sell in time to miss the ride back down.

  61. A. Lewis Says:

    #60 is correct – you’re just arguing over the label. I think both have stated their strategies and that’s fine.

    The thing is, you just don’t know what conditions will be like during the years when you’re retired and trying to take the money out. People trying to retire now, who didn’t move their stuff out of equities and into bonds during the previous 10 years are truly hosed. Many people in this basket.

    People who move their stuff out now are selling low and getting hammered.

    I still have a 30+ year timeframe until retirement, I’m willing to take on risk to get the longterm returns I hope will be better than bonds or CDs. But it sure is risky, as we just saw in the last 12 months of trading.

    Go look at a long term graph of the DOW, and pick any 2 spots separated by 10 years. The long term average is certainly still positive, but we just added a bunch of data points that bring it down. There were plenty of ‘bad’ years to be selling what you bought 10 years previous.

    Good luck to all, and I humbly suggest not putting all your eggs in one basket, and keeping in mind the timeframe you have for your investment.

  62. A. Lewis Says:

    I think I recall studies of dollar-cost averaging vs. other investment strategies, and it basically reduces both risk and reward. So it’s not stupid, but it reduces your total possible gain because you buy some at the top, but it protects from total loss because you buy some at the bottom.

    Remember, the selling strategy is at least as important as the buying strategy.

    Anyone want to share their selling strategies?

  63. A. Lewis Says:

    I should have said it helps out your gains by guaranteeing you buy some at the bottom of each trough…

    It doesn’t eliminate risk.

  64. BuyersAreIdiots Says:

    Another great article by Kiyosaki

    Ah yes. Post links to the guy who is little more than a shill that makes money by selling ‘get rich quick’ nonsense to idiots stupid enough to buy into his rubbish.

    You may want to read a little background on the investigations they did into what Kiyosaki alleged in his book ‘Rich Dad, Poor Dad’. The most amazing revelation:

    RICH DAD DIDN’T EXIST!

    Yup. Entirely imaginary. Despite all the efforts of those to discern Rich Dad’s true identity, no such records could be discovered to match Kiyosaki’s claims. And when pressed on the issue once by a reporter, Kiyosaki replied with a smirk: “Can’t Rich Dad be like Harry Potter??”

    Uh, no Robert. Because your books sell in the NON-FICTION section.

    And finally, when investigative reporters tried to look into Kiyosaki’s supposed ‘assets’, all they discovered was the income that came from the sales of his books and infomercials. His exposure to real estate and stocks is minimal and he is certainly not an entrepreneur.

    But naturally, Real Excreter falls for his nonsense like a moth to a flame.

    Epic fail. Yet again.

  65. A. Lewis Says:

    The linked article makes it clear the guy is a fan of investing in Gold.

    Gold is a curious and odd corner of the investing world. Most people lose a ton of money in gold. Many people flee to it in times of distress because it’s regarded as safer than even T-bonds (in a way). They usually stay in too long and miss any gains made in bonds or equities. Then they jump back into equities right before a crash.

    If you time it right, you can make a killing! Look at the price changes over the last 18 months!

    But it’s very hard to be perfectly counter-cyclical all the time. It’s gambling. Can you really convince yourself you have unique insight, or extra information vs. all the other investors? Such that you ‘know’ when to get and when to get out.

    I’m not saying I don’t do it a bit – like talking about what I think the Dow will or won’t do – but it’s tough to be right all the time.

  66. A. Lewis Says:

    #64 – thanks for the background on Kiyosaki, but please obey the rule Burbed asked for – don’t use names of other posters for the rest of the week, including pejorative nicknames you made up. Just refer to their post by #, and that should be enough to make your point.

  67. Real Estater Says:

    >>But it sure is risky, as we just saw in the last 12 months of trading.

    The risk is greatly reduced now because of the last 12 months of trading.

    >>and I humbly suggest not putting all your eggs in one basket

    …and one way to achieve it is Enhanced Dollar Cost Averaging.

    >> think I recall studies of dollar-cost averaging vs. other investment strategies, and it basically reduces both risk and reward.

    This is absolutely true, which is why I don’t buy the traditional dollar cost averaging approach. You can’t precisely time the market, but you can do better than blindly buying when the time is up.

    >>Anyone want to share their selling strategies?

    When I have doubled my money, I take half of my chips off the table. From that point on, I can never truly lose money.

  68. Real Estater Says:

    >>The linked article makes it clear the guy is a fan of investing in Gold.

    Actually, he makes it clear that he advises against buying gold at current levels.

  69. Real Estater Says:

    >>People trying to retire now, who didn’t move their stuff out of equities and into bonds during the previous 10 years are truly hosed.

    For anyone who is retiring, they should’ve been moving out of their stock positions into lower risk investments in advance. Only a moron would be fully invested in stocks at age 65.

  70. A. Lewis Says:

    #67-69, Well, your advice and analysis is staggering in its simplicity. I think it stands on its own, not needing further followup from me. Thanks for sharing your view.

    I would clarify one point – “not putting all your eggs in one basket” does not mean just avoiding investing all your cash in the stock market on one date in time.

    It means not having your entire worth invested in only stocks. (or only bonds, gold, real estate, hedge funds, CDs, art, or stuffed in your mattress).

  71. BuyersAreIdiots Says:

    but please obey the rule Burbed asked for – don’t use names of other posters for the rest of the week, including pejorative nicknames you made up. Just refer to their post by #, and that should be enough to make your point

    Ah, man! Thanks for stifling my creativity burbed. And I gave that nickname I created for “he who shall not be named” quite a lot of thought. :-(

  72. burbed Says:

    Thanks for stifling my creativity burbed

    Sorry. Maybe you can harness that creativity in coming up with a new financial instrument to help the housing market soar!

    That’s some real $$ we’re talking about…

  73. Real Estater Says:

    Agreed, maybe he can make use of his “creativity” in more constructive ways.

  74. Real Estater Says:

    Yet another house I mentioned here before has sold:

    http://www.burbed.com/2009/01/23/cheapest-residence-in-cupertino-11-condo-for-459888/#comment-36958

  75. Real Estater Says:

    And this one too:

    http://www.burbed.com/2009/02/05/live-in-a-million-dollar-neighborhood-in-sunnyvale/#comment-38144

  76. Real Estater Says:

    OK, I better introduce a new one.

    This new listing is a great deal at $2.95M:

    http://www.redfin.com/CA/Palo-Alto/300-Lowell-Ave-94301/home/1801356

  77. BuyersAreIdiots Says:

    Sorry. Maybe you can harness that creativity in coming up with a new financial instrument to help the housing market soar!

    How about this:

    —————————————–
    “Real Estate Tangible Asset Recovery Dynamic”

    The new plan being pushed forth by members of the National Association of Realtors will look to make a modification to our constitution to provide a clause indicating that real estate cannot go down. Such a provision would ensure that the pride and unlimited wealth of home ownership would become a permanent and completely loss-free mechanism.

    The plan, being called the ‘Real Estate Tangible Asset Recovery Dynamic’, or ‘RETARD’ for short, will consist of a constitutional ammendment and a blank check for $1,000,000 US dollars to every home buyer in the continental United States to ensure that adequate funds be available to anyone who wishes to own a home.

    Note that individuals in the Real Bay Area will receive no monetary incentive since real estate in that area never goes down due to the effect of the Stanford Linear Accelerator and its sphere of influence that protects Palo Alto in a cocoon of complete impermiability.

    —————————————–

    This that will work?

  78. A. Lewis Says:

    #77 – nice one. It’s about as well thought out and planned as the TARP :-)

  79. A. Lewis Says:

    I’d like my check now, please. Can I get a pony to go with that?

  80. A. Lewis Says:

    Well, I’ll be interested to find out what price they sold at. They sure look like nice homes!

    Let’s have an overview of the Palo Alto market:

    http://www.altosresearch.com/research/CA/PALO+ALTO

    Let’s, see median down, DOM up like 50%, price/sqft off like 20%, inventory up like 40%.

    Looks like it’s humming along!

    Hey, price/sqft is still at like $850 – it’s not like it’s cheap yet!

    I’m sure this is due to the really crappy low end houses (you know those ones that only sell for $1.1M on busy streets in PA) dragging all the averages down. All the awesome houses selling at high prices are being drowned out by this noise!

    We’re just separating the wheat from the chaff now.

  81. Prof. Bleen Says:

    #80: UAD.

  82. nomadic Says:

    UAD?

    under-age drinking??? unmanned attack drone?

    #79 – you can have a pony for being succinct. ;-)

  83. Prof. Bleen Says:

    Useless Aggregate Data. Not to be confused with MAD, or Meaningless Anecdotal Data.

  84. nomadic Says:

    ah, yes! how could I forget? thx

  85. madhaus Says:

    #83: Not to be confused with Meaningless Aggregate Data Having Anecdotal Underpinning Story.

    #82: Well said!

  86. anon Says:

    #73-76 is excrement.


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