June 17, 2009

Underpricing houses in Palo Alto?

2731 ROSS Rd, Palo Alto, CA 94303 | MLS# 80922362
2731 ROSS Rd Palo Alto, CA 94303
Price: $1,299,000

1176940274-2731
Beds: 3
Baths: 2
Sq. Ft.: 1,912
$/Sq. Ft.: $679
Lot Size: 6,786 Sq. Ft.
Property Type: Detached Single Family
Style: Ranch
Stories: 1
View: Neighborhood
Year Built: 1946
Community: South Palo Alto
County: Santa Clara
MLS#: 80922362
Source: MLSListings
Status: Pending Without Release
On Redfin: 28 days
Great Midtown location, this spacious rancher is bright, freshly painted and move in condition! 3 big bedrooms/2 updated bathrooms including a master suite w/ walk in closet. Kitchen has granite counters, gas range, wall ovens, eating area and storage galore! Separate family room with privacy doors, fireplace and access to backyard. Refinished hardwood floors; detached rear garage; lush garden . ..

Burbed reader Herve wanted me to feature this house… mostly because of this…

1604577557-2731a

According to Herve:

Bought in July 2005 for $1,225,000.

Asking price now: $1,299,000 (5% commission would be $65K).

Ouch. Is this house selling at a loss?

But on the flipside, let’s look at how quickly this house went into pending.

My guess – it was an under pricing ploy. This scheme quickly generated 23 bids, pushing the final sales price to $1.4 million.

What do you think happened?

Comments (204) -- Posted by: burbed @ 5:25 am

204 Responses to “Underpricing houses in Palo Alto?”

  1. Real Estater Says:

    We’d have to wait to see the result of this one, but 3370 Ross was listed at almost the same price ($1.298M), and sold for $1.408M in 5/2009.

  2. nomadic Says:

    The lot for 3370 is 3x as large at 17,750sf.

  3. anon Says:

    Uh oh, NY – the hammer’s comin’ for ya…

    http://www.time.com/time/business/article/0,8599,1905085,00.html

  4. nomadic Says:

    but Facebook is beating MySpace – score one for us over LA!

    Reports from comScore and the Conference Board this week both showed Palo Alto, Calif.-based Facebook has grown larger than it Los Angeles-based rival.

    http://www.bizjournals.com/houston/stories/2009/06/15/daily32.html

  5. A. Lewis Says:

    Higher-end house prices have a long way to fall:.

    Note that CR is quite as bearish as JP Morgan seems to be about CA housing. But I say it depends. We always say how the low-end went up much more in percentage terms, so the high-end can’t be expected to fall as far. I continue to maintain that the first part is true, but if you find a neighborhood that hasn’t fallen much yet, it still has a long way to go.

    People are in denial about their favorite neighborhoods. At this point, it’s all about the school districts propping things up and giving good neighborhoods stagnation for years instead of a sharp drop.

    If the CA budget crisis continues to hurt schools, watch out if your favorite neighborhood school starts to underperform.

    OTOH, if your PTA donations can get up to $10k/student per year, you can fund a great school yourself – screw the state! And you’ll probably pull away from your poor neighboring school district.

    At what point are you effectively paying, through donations and labor, for your public school at a similar amount to private school?

    I have stated how people do the math for the school district on paying private school tuition for 2 or 3 kids K-12, and decide the overpriced house is worth it for the public school. But how much are they expected to lay out these days in the best public school districts with their incredible PTAs and other fund drives?

    I know in some of the special East Bay neighborhoods, the up-front ‘expected donation’ for the PTA is $2500/child/year, and then you are expected to donate and bid on at things at two auctions each year, volunteer in the classroom 2-4 times a month, give teacher gifts, classroom supplies, garden supplies, and a variety of other things.

    Maybe it’s only $3-4k/year/child, which is still a bargain compared to private school. One should discount the premium you want to pay to live their by this amount, though – public school ain’t free!

    But do you think those costs will go up as public funding is slashed? How are public school ‘donations’ in your neck of the woods?

  6. UnrealAlex Says:

    Geez, 75k to 1.2-1.4 mil?

    $75k would mean a monthly payment of $750, probably underpriced at that rate, since in 1992 the computer boom was about to take off, a person could made decent money forming their own Ebay by selling stuff on Usenet, two min-wagers could keep the house paid for. Wait tables on University Avenue and you were making more than min. Start out bussing tables and live on the leftovers.

    But 1.x mil? Isn’t that a monthly payment of about 10 grand? What, you get 10 people in there paying a grand each rent? TEN? And min-wagers can’t pay a grand, they pay $500 a month rent or share of rent at most, more typically $300-odd.

    Geez, I could’a had this house in ’92 if I’d learned how to insteall Ethernet systems and moved up to the BA. And all the offers I was getting (I was on unemployment) for free training, too.

  7. BuyersAreIdiots Says:

    I am curious about that $75,000 sale price in 1992. So it went from $75,000 to $1.4 million in less than 20 years? Something doesn’t add up.

    Even if you use the Real Excreter ‘doubles every ten years’ statistic (which is false), this house would only be in the high $200k range.

    What gives?

  8. Gavin Says:

    Here is a graph of a “Real Bay Area” (RBA) zip code versus a non-RBA zip code.

    For a RBA zip code I choose 94040 (Mountain View part next to Los Altos) and for a non-RBA zip code I choose 94085 (Sunnyvale next to 101)

    I have chosen both zip codes because I have the data available.

    http://manyeyes.alphaworks.ibm.com/manyeyes/visualizations/mountain-view-sunnyvale-per-square-f

    In the graph you can select both 94040 and 94085 by using “Ctrl-Click” on a PC. You can then select only the premium on the graph to display how much more 94040 costs over the 94085 zip code.

    Over the last twenty years from 1988 to 2007, prices in 94040 were between 15% and 50% higher than in 94085. There is NO trend in the premium which averaged 30% over those 20 years.

    In 2008 however the premium rose to 73%. The zip codes are only about 5 miles apart. The period from 1998 to 2008 includes both the 1990 peak and the more recent housing boom as well as the early 1990s housing downturn. Prices in the two zip codes appear to track each other in good times and in bad.

  9. nomadic Says:

    The $75k was intra-family – looks like the title went from one person to a couple, and they took out a $150k loan at the time. Who knows what the “real” value was in 1992, but in 1989 I paid more than that for a starter house in BF-nowhere near Ann Arbor, MI. Prices here had to be higher even then.

  10. nomadic Says:

    One more thing – the current owner put 20% down and there are no refis on PropertyShark. Yay, one responsible person out there! She probably wants to get out before the losses kick in.

  11. nomadic Says:

    Gavin – nice graph! Looks like a compelling argument as to why 94040 prices must fall to get the premium back to historical levels. (Sure 94085 could go back up, but who are we kidding?!)

  12. A. Lewis Says:

    #7, it was built in 1946, what would you like to bet it wasn’t 1912 square feet in 1946? So at some point they made a big re-model expansion, and that accounts for some of the difference. The other is the non-arms-length transaction nomadic points out.

    #8 awesome, Gavin. Thanks for illustrating a point I’ve harped on before – I’ll grant a premium of neighborhood X over nearby neighborhood Y because of ‘location’. That price premium makes sense in real estate. But why should it go up or down, in percentage terms?

    There should be good reasons (schools, jobs, construction of nice new homes, awesome restaurants or shopping or SOMETHING). If there isn’t anything fundamental, it’s just feverish bubble pricing, as the few percent of the housing that turned over each went to a few people drinking the kool-aid on that neighborhood.

    That can easily be reversed, which is what you should expect.

    Fundamentals are not easily reversed, fleeting buyer sentiment is.

  13. nomadic Says:

    LOL – 1912sf , biiig expansion! ;-) FWIW, PropertyShark says the effective year built is 1962 so maybe that’s when they expanded (if square footage was added).

    In any case, we’re only speculating on the jump since 1992. Since they got a $150k loan at the time, we can guess it was worth $187.5k if we assume an 80% LTV requirement.

  14. BuyersAreIdiots Says:

    In any case, we’re only speculating on the jump since 1992. Since they got a $150k loan at the time, we can guess it was worth $187.5k if we assume an 80% LTV requirement.

    I’ll give them a little extra added padding and say it was worth $200k in 1992. Real Excreter math indicates properties double every ten years in the RBA. So by that logic, that property should not be worth more than $700k or so. Yet its listed for $1.3 million.

    Suuuure. No bubble here. :-)

  15. BuyersAreIdiots Says:

    One of the primary reasons that RBA pricing is taking longer to correct is simply just a consequence of the slower realization of people in understanding that ALL real estate was over-valued. Not just certain ‘non-RBA’ parts.

    If you remember the realtor cliches from the bubble mania, they began to alter their stance and indicate that all real estate was ‘local’. Real Excreter parrotted that on several occassions here. As the bubble began to obviously deflate in regions like Stockton and Sacramento, the NAR merely adjusted its line of reasoning and drew a distinction between ‘prime’ real estate and areas of ‘excess’ or speculative frenzy. They tried to push forth the concept that certain areas were justified in their real estate increases (Palo Alto, Los Altos, etc) while other areas were not.

    But as Gavin’s graph demonstrates, while certain areas do carry a premium, that premium actually tracks well against middle and lower ranged homes.

    The other mitigating factor pertaining to RBA real estate is it was fueled by the dot com bubble. Many folks used the fictitious wealth of the stock bubble to purchase homes. One needs to recognize though that this money was simply ‘funny money’. It should never have existed in the first place. So in essence, in a lot of prime areas, the bubble began not with over-leveraging, but by people literally just hitting the lottery.

    Problem is, that is not sustainable. You had some specific hiccups in wealth with Google going public and the success of Apple. But in the end, most of those homes were purchased by stock wealth. The remaining parts of the Bay Area were mostly fueld by debt.

    Debt was the first thing to cave in. So the low and middle end homes are correcting faster. But the high end homes, with fewer transactions and less leverage in most cases are holding up better. But in the end, the result will be the same since what fueled their original increase in value (stock wealth) is now gone.

    As the other segments of housing reach normality more quickly, there will be tremendous pressure at the top. Without the funny money that drove the original increase, high end will eventually crater as well.

    I remember coming across a graph a few years back that showed the market correction in New York City in the 1991 recession. The graph Gavin provided mimicked what I saw in the New York graph very well. The high end held up the longest but it also crashed the fastest towards the end of the bubble. I see something similar happening in RBA in the next 2-3 years. Especially when the I/O and option-ARM loans begin to come to maturity. While most of those were most likely in the middle area of housing, that will eventually drop the floor out of the market and the correction will proceed more rapidly in ernest after that.

  16. madhaus Says:

    Nice analysis BAI. Take a look at that article anon posted in #2 about the coming crash in the NYC Metro region. Forecast of a 40% drop in housing prices — no downturn here!

    Riiiiight. My brother owns a high-end house in a high-end NJ zip code, and his house is already down 25% from 2-3 years ago. This is gonna hurt bad.

    Gavin, nice job with the datasets on ’40 and ’85. But did you check the number of housing units in ’85? I know there’s one Sunnyvale zip that’s mostly industrial but I can’t remember if it’s that one or ’89. For a truly crap cross section of Sunnyvale, try the area south of 101 near Fair Oaks. What a dump. Actually from checking Google Maps, looks like you picked that area. 94089 is near 237 and the lovely garbage processing plants.

    A. Lewis, good points on the coming school system funding issues. Cupertino Union SD managed to slip a parcel tax past the angry seniors who don’t want to pay for other peoples’ kids. (there’s a lot of racism behind that sentiment, but that’s another story for another day.) Without the tax, CUSD, with the lowest per-student funding in Northern California, would have to start firing teachers. Any class that isn’t covered on the STAR test would be on the chopping block, so say goodbye to PE, Band, Choir, and Art.

    Nomadic, I am going to to read that article you referred me to yesterday, I promise!

  17. Real Estater Says:

    BAI,

    Your analysis is flawed in several ways. First of all, the demand in the BA is real. It is not artificially pumped up by realtors. It is the buyers who are supporting the price levels. Secondly, the market has already firmed up from several months ago. this is undeniable. You talk anyone who is either shopping for a home or in the RE business; they’ll tell you this is the case. Third, the downturn in NYC is greatly exaggerated. Like in the Bay Area, the places that are down are not the core areas at all. Madhaus’ brother getting slammed in NJ says nothing about Manhattan. Finally, as I said before, Option-ARMS are not going to have a big affect in the RBA. The few people who need to sell have already done so; they’re not going to wait til the last minute.

  18. nomadic Says:

    Hey, who am I to hand out reading assigments? Especially ones on boring old economics?

  19. madhaus Says:

    Oh come on, nomadic, you’re the nicest guy here. If I’m going to deal with all the rude boys, the least I could do is acknowledge you. :)

  20. nomadic Says:

    where did BAI say demand in the RBA is pumped up by Realtors?

  21. Real Estater Says:

    The reason RBA prices are holding firm is because not only is there no downturn there, there is also a lack of financial suffering. When I look at the folks on my street. The VP tells me he’s having a pretty decent year; the doctor says the hospital is packed; the lawyer is a partner at his firm and no one will ever fire him; the retired folks bought their homes for 30 grand in the 50′s, and they are not going to feel the pinch even if prices drop 90%. Finally, as for me, I’m scheduled to go on a few business trips, and I’ll be loading up my hotel points and airline mileage for some nice vacation. Free money happens every year.

  22. burbed Says:

    Cupertino Union SD managed to slip a parcel tax past the angry seniors who don’t want to pay for other peoples’ kids. (there’s a lot of racism behind that sentiment, but that’s another story for another day.) Without the tax, CUSD, with the lowest per-student funding in Northern California, would have to start firing teachers.

    Sounds like juicy gossip that needs to be featured on Burbed. Do tell! Email me and it’ll appear as a post!

  23. madhaus Says:

    Am I reading you correctly, burbed? You want me to GOSSIP?

    In the words of Alice Roosevelt Longworth, “If you don’t have anything nice to say, come sit by me.” Or maybe it was Dorothy Parker. How am I supposed to know? I wasn’t born yet.

  24. Pralay Says:

    Secondly, the market has already firmed up from several months ago. this is undeniable.
    —–

    It is undeniable that above statement is just an opinion from RealEstater. Not fact.

  25. Real Estater Says:

    Pralay,

    Until you get a clue, you are not qualified to say something is not a fact.

  26. Pralay Says:

    Finally, as I said before, Option-ARMS are not going to have a big affect in the RBA.
    ——

    Well, it would interesting to find something where RealEstater would say “this could have negative effect on RBA housing market”. Does anyone remember RealEstater saying anything like that? His position is always “does not affect RBA”. For example, here:

    Housing downturn? Credit crisis? Mortgage issues? Never heard of it in the RBA!

    RBA immune from EVERYTHING. So, what is point of saying that Option-ARM is not going to have big impact on RBA?
    Nothing is going to have big impact on RBA. That’s the simplified version of RealEstater’s position.

  27. Pralay Says:

    Until you get a clue, you are not qualified to say something is not a fact.
    ——-

    Until it is presented as fact, it is just opinion.

  28. Pralay Says:

    When I look at the folks on my street. The VP tells me he’s having a pretty decent year; the doctor says the hospital is packed; the lawyer is a partner at his firm and no one will ever fire him;
    —-

    Useless anecdotal data.

  29. Pralay Says:

    The few people who need to sell have already done so; they’re not going to wait til the last minute.
    —–

    One word: inventory.

    Someone who needs to sell does not mean that he is able to sell.

  30. madhaus Says:

    Finally, as I said before, Option-ARMS are not going to have a big affect in the RBA.

    But they will have a huge effect on the RBA. If their personalities are a bit understated, people can deal.

  31. DreamT Says:

    I thought RE’s street was CXO territory.

  32. Pralay Says:

    And hospital is packed —> no downturn here. :)

  33. anon Says:

    Excreter,

    Until you get a clue, you are not qualified to say anything.

  34. Real Estater Says:

    I’m still not completely ruling out the possiblity that Pralay and anon are the same person. They sure seem to have the same level of intelligence (or lack of).

  35. R Says:

    “Option-ARMS are not going to have a big affect in the RBA. The few people who need to sell have already done so; they’re not going to wait til the last minute.”

    Wrong. They can’t sell, because if they purchased after 2004 (a whole lot of people) they’re under water. Thus, the reality is that they actually do stay until the “last minute” to enjoy the approximately nine months free rent CA affords, which is typically how long it takes the lender to go through the foreclosure process (assuming they immediately record the NOD) and evict them. I know several people that haven’t paid rent in a few months and still haven’t got a notice of default. They’ll enjoy well over a year of free rent. Pretty sweet deal if you ask me. And if you really don’t think option ARMS exist, you need to talk to more lenders.

    Lastly, your statement that “the market has already firmed up from several months ago. this is undeniable.” is not only an opinion, it an unsubstantiated opinion that is directly contradicted by the numbers cited here daily. I know numbers and analysis are not your forte and to be avoided, but you forget, people on this board have the ability to understand these things.

  36. Pralay Says:

    RealEstater,
    Until you get some intelligence above Realtard level, you are not qualified to say anything about intelligence. :)

  37. R Says:

    LOL, now I have heard it all. RE questioning other somebody else’s intelligence (right after he attempts to critique analysis and confuses opinion and fact). At least the word intelligence is spelled correctly.

  38. Pralay Says:

    I know numbers and analysis are not your forte and to be avoided,
    —–

    You mean RealEstater’s math is hard condition, right?

  39. R Says:

    Pralay, some realtors actually are capable of comprehending reality and using numbers to support their arguments. Most even understand the difference between fact and opinion. But not our Chucky.

  40. anon Says:

    “I’m still not completely ruling out the possiblity that Pralay and anon are the same person. They sure seem to have the same level of intelligence (or lack of).”

    Of course you’re not.

    This is because you are barely literate and do not see the completely different writing styles.

  41. Pralay Says:

    Pralay, some realtors actually are capable of comprehending reality and using numbers to support their arguments.

    In that case they are Realtards. Realtards are subset of Realtors.

  42. R Says:

    “In that case they are Realtards. Realtards are subset of Realtors.”

    LOL. That works for me.

  43. bob Says:

    The reason RBA prices are holding firm is because not only is there no downturn there, there is also a lack of financial suffering. When I look at the folks on my street. The VP tells me he’s having a pretty decent year; the doctor says the hospital…

    Today I saw a few pigs flying in the air. Thus it must surely be common knowledge that pigs have wings.

  44. bob Says:

    Lastly, SV has pretty high unemployment numbers. Your observations are merely anecdotal.

  45. anon Says:

    But firm grip bob, FIRM GRIP!!! Real estater has a firm grip. Just ask him.

    What does a firm grip entail?

    Observations based on open house attendees, assessment based on listing prices and sale pending signs.

  46. Pralay Says:

    Observations based on open house attendees, assessment based on listing prices and sale pending signs.
    —–

    And the metric based on those dubious observations and assessments has a very fancy name – pulse of the market.

  47. nomadic Says:

    #35
    R, well said.

  48. Real Estater Says:

    R says,
    >>They can’t sell, because if they purchased after 2004 (a whole lot of people) they’re under water.

    Let me stop you here. This is plainly a bogus claim. Majority of the people who bought in 2004 are not under water. It’s only the people who bought in the wrong areas that are under water. People who bought more recently (e.g. 2006, 2007) may have given back their gains, which is no big deal. There’s no law saying you must make x% 2 years after purchasing your home. If you bought a property within the past 3 years in a good RBA neighborhood, you’ve made a good investment.

  49. nomadic Says:

    are you high?

  50. Herve Estater Says:

    > There’s no law saying you must make x% 2 years after purchasing your home.

    I thought it was doubling every 10 years, no matter what 10-year period one picks, so shouldn’t it make 14.9% after 2 years? Math is hard.

  51. DreamT Says:

    Following the same line of thought, we ought to presume that RE considers his time spent on burbed this past year a good investment.

  52. Real Estater Says:

    Herve says,
    >>I thought it was doubling every 10 years, no matter what 10-year period one picks,

    You thought wrong, because the actual statement was that RBA prices double every 10 years on the average. I guess you don’t understand the concept of average. Indeed math is hard.

  53. Herve Estater Says:

    > You thought wrong, because [...]

    Note to self: avoid subtle sarcasm, not everyone gets it.

  54. R Says:

    “Let me stop you here. This is plainly a bogus claim.”

    - See Bob’s flying pigs comment. If I could price and maybe sell one house at it’s 2005 price then all houses have only dropped to 2005 levels. Brilliant.

    “Majority of the people who bought in 2004 are not under water.”

    Stealing from nomadic, are you high? Citation to supporting fact please.

    “It’s only the people who bought in the wrong areas that are under water. People who bought more recently (e.g. 2006, 2007) may have given back their gains, which is no big deal.”

    Well, at least you concede prices have fallen. Pralay, please note for future reference. But prices are at least on their way back up as of Jan 2009 (ie. the bottom per you), right? BTW, don’t forget to take 6% off the price for commission.

    “If you bought a property within the past 3 years in a good RBA neighborhood, you’ve made a good investment.”

    Glad you don’t profess to be a financial advisor. Could you please explain how purchasing something that has dropped in value and thus could be purchased now for 100k + less is a good investment?

  55. nomadic Says:

    My favorite realtard quote, if I remember it correctly, is “there has never been a 10 year period when Real Estate has not appreciated.” Think for a moment to fully appreciate how useless it is.

  56. DreamT Says:

    Herve – would you joke about Aristotelianism with a first-grader?

  57. nomadic Says:

    R, check this out:

    http://www.burbed.com/2009/03/03/follow-up-1264-latham-st-mountain-view/#comment-40084

    Real Estater Says:
    March 3rd, 2009 at 4:32 pm

    Steve,

    No need to be overly dramatic. If you look at the numbers, the “peak” on that street was $1.5M. That’s what meant by icing. The nominal high is more like $1.4M. The listing sold for $1.275M. The real drop (from $1.4M) is less than 20%.

    $125k or even $225k is chump change to Chucky.

  58. anon Says:

    lol

    It’s almost as if one doesn’t even have to try to make excreter look like a fool anymore…

  59. anon Says:

    “$125k or even $225k is chump change to Chucky.”

    That’s because of the qualifications one must have in order to live in 94301.

  60. Real Estater Says:

    nomadic,

    The debate is not over whether it’s chump change or not. The question is why does it matter? I’ve always said real estate is investing for the long term. You should not be losing sleep over $100K or 6% commission everyday. If so, you ought to stop investing in your 401K right away, because I bet you can easily encounter that kind of fluctuation.

  61. nomadic Says:

    It’s almost as if one doesn’t even have to try…

    Yep, when I can pull up those quotes, it’s gettin’ to be like shooting fish in a barrel. :-)

  62. nomadic Says:

    As usual you are attempting a deflection. Let me spell it out for you oh-reading-comprehension-impaired-one:

    You said “If you bought a property within the past 3 years in a good RBA neighborhood, you’ve made a good investment.”

    That flies in the face of losing 20%-30% on a house purchased in 2005. The extra year should have been an added benefit.

  63. Real Estater Says:

    After I bought Dow at 7500, imagine if I started panicking over the loss as it descended to 6500. I’d never have captured the 25% gain that later ensued. Counting money on short term basis and losing your nerve is plain silliness. Fear is not an investment strategy.

  64. anon Says:

    neither is willful blindness.

    neither is ignorance.

    you advocate both.

  65. Real Estater Says:

    nomadic says,
    >>That flies in the face of losing 20%-30% on a house purchased in 2005. The extra year should have been an added benefit.

    Let me repeat. RBA homes are not losing 20-30% from 2005 price levels. This is unfounded hysteria. If you cherry pick, you may find certain homes with issues that are down that much from “the peak”. It is by no means a common scenario.

  66. Pralay Says:

    After I bought Dow at 7500, imagine if I started panicking over the loss as it descended to 6500. I’d never have captured the 25% gain that later ensued.
    —-

    Oh, no, someone who cannot keep his facts straight (as documented here) talking about his famous purchases again.

  67. Pralay Says:

    If you cherry pick, you may find certain homes with issues that are down that much from “the peak”. It is by no means a common scenario.
    —-

    If you cherry pick, you may find certain homes are selling over asking. It is by no means a common scenario.

  68. Real Estater Says:

    Pralay,

    I won’t cover the same topic that’s been discussed multiple times before.

    For your reading comprehension problem: The above example is picking 2 arbitrary points. There’s no reason for your digression.

  69. Real Estater Says:

    >>If you cherry pick, you may find certain homes are selling over asking. It is by no means a common scenario.

    What does that have to do with what we were discussing?

  70. Pralay Says:

    What does that have to do with what we were discussing?
    —-

    Are you really discussing? Who comes up with those cherry picked “gone pending” or selling above asking price examples to show “no downturn here”? If you think that others are guilty of cherry picking, are you not guilty of same thing? What metric do you follow to conclude that 20-30% drop from 2005 price is a hysteria? So far you haven’t come up with anything beyond some cherry picked “gone pending” lists.

  71. Pralay Says:

    I won’t cover the same topic that’s been discussed multiple times before.
    —-

    LOL! “Multiple times” – that might the root cause all the inconsistencies.
    Remembering something what you claimed in past – that must be very hard for you.

  72. Real Estater Says:

    Pralay,

    The discussion was on whether homes dropped 20-30% from 2005 levels. Everyone is gone now because you’ve killed the thread by digressing into a debate around over-asking and cherry picking.

  73. Pralay Says:

    ‘Millionaire Homes’ May Lose Value Until 2012: Chart of the Day

  74. Pralay Says:

    Everyone is gone now because you’ve killed the thread
    —–

    That’s just your opinion, RealEstater. Not fact.

  75. DreamT Says:

    #72 – Not gone but immensely bored by your posts.

  76. Real Estater Says:

    >>‘Millionaire Homes’ May Lose Value Until 2012: Chart of the Day

    The key word there is “may”. It may or may not. In other words, it’s anyone’s guess.

    I leave you with 2 thoughts:

    1. National home prices may bottom out in 2011, but RBA leads the nation. We already bottomed out in Q1 2009.

    2. A million dollar home elsewhere is a very expensive home. Homes simply are not worth that much elsewhere. However, a million dollar home here is a middle class shack, where the market is strongest.

  77. Pralay Says:

    We already bottomed out in Q1 2009.
    —-

    Just because you say so, it does not make it a fact.

  78. Pralay Says:

    I leave you with 2 thoughts:
    —–

    You mean absurd Realtard logic, right?

  79. Real Estater Says:

    My opinion is based on fact. Let’s not waste more cycle on this. DreamT is already bored, and so am I.

  80. Pralay Says:

    My opinion is based on fact.
    ——

    Just because you say so, it does not make it a fact.

  81. madhaus Says:

    Ha ha. My shack hasn’t been worth a million since January 2009. Since it’s worth only $935K today, therefore 1/09 is not the bottom.

    Better trolls, please.

  82. Real Estater Says:

    madhaus says,
    >>Ha ha. My shack hasn’t been worth a million since January 2009. Since it’s worth only $935K today

    Is that an opinion or fact? Did you cherry pick your estimates? Do you want more Pralay-style trolling?

  83. Pralay Says:

    Ha ha. My shack hasn’t been worth a million since January 2009. Since it’s worth only $935K today, therefore 1/09 is not the bottom.
    —–

    Probably you excluded those “selling briskly” (actually 200 DOM) homes while assessing your shack.

  84. Real Estater Says:

    And don’t forget, just because you say so doesn’t make it a fact!

  85. Pralay Says:

    DreamT is already bored, and so am I.
    —–

    DreamT bored. RealEstater is boring.

  86. Pralay Says:

    And don’t forget, just because you say so doesn’t make it a fact!
    —-

    200 DOM – it’s a fact.

  87. DreamT Says:

    Ok, sorry for being bored. More outrageous factoids and novelty, please. Enough with the same old opinions stated time and again.

  88. DreamT Says:

    Pralay, would you buy under certain circumstances in the south bay or peninsula? If yes, do you have a timeline, price range and a specific area in mind?

    I’ll tell you (and other renters) this: having purchased a primary residence in 2005, even if I cannot break even for ten more years, even not having purchased in my most desired location, even if I could have “saved” by renting or some lucky investment, I’d be hard pressed to regret my decision to buy. There are a lot of people like me who don’t buy for the short term and are quite happy with the outcome, underwater or not. In my case, the intangibles of not having to rent greatly exceed a 10% premium over renting. I’d done the hard calculation at purchase time, and after discounting equity buy-down and tax deductible interests over a period of 10 years (including the lowering of the tax bracket), at almost the peak of the bubble I was still better off buying rather than renting, considering the premium I was willing to pay for owning, providing certain neighborhood and immediate house location criteria would be met. Just though I’d throw that sobering fact out there – I think I’m somewhat representative of many past and present buyers around here.

  89. DreamT Says:

    Just so that we’re clear, when I’d done that calculation, I had factored in a 0 % equity gain over 10 years, this was purely a cash-flow and buy-down calculation. The reason is I was not buying an investment but a place of residence, so any equity gain beyond 6.4% (1/(1 – 6%)) would be a bonus only at the expense of selling my primary residence (plus equity gain has negative impact on cash flow due to increased property taxes). Long story short, I’d considered this as an alternative to renting rather than as an investment and it made sense, even in 2005.

  90. Real Estater Says:

    DreamT,

    Your post is not very different from my positions:

    – You can’t directly compare rent payment to mortgage (owning deserves premium over renting).

    – Owning something is better than not owning.

    – Home ownership has intangible benefits.

    – Homeowners come out ahead in the long run (RE is a long term investment).

  91. Real Estater Says:

    DreamT says,
    >>Pralay, would you buy under certain circumstances in the south bay or peninsula? If yes, do you have a timeline, price range and a specific area in mind?

    I’m glad you’re asking these questions. It’s another way of asking: what’s the excuse for not buying?

  92. Real Estater Says:

    DreamT,

    Your approach is fine, although I would’ve not bothered with any rent vs. buy calculation. The numbers won’t work out in the short term; it would only deter you from owning a home. Over the long haul, the result nearly always surprise to the upside. The only calculation that is really necessary is whether you can afford the monthly payment.

  93. DreamT Says:

    RE,
    #90 – Yes I know our positions are less divergent than others. As I stated before, my issue with you is your delivery rather than your position, specifically the arrogance and the insults.
    #91 – Not at all. Homeownership is important to me, less so to some. Same as why some are better fit to be entrepreneurs and others are not.
    #92 – I typically take a conservative approach and I consider myself to be both risk-adverse and opportunistic.

  94. SiO2 Says:

    DreamT,
    The intangibles are important. I agree. Sometimes people do things for non-financial reasons.

    RE,
    There’s plenty of reasons why someone would rent now.
    1. They like moving for variety. Some people like it, some don’t. Or they don’t plan to stay here for more than 5 years or so. (Hi Bob!)
    2. Prices probably will fall further. And after the last couple of housing busts, the trough was flat for more than a year. Check out the $/ft charts posted on the previous threads. So there’s really no fear of missing the upturn.
    3. Have a stable landlord who’s responsive to maintenance requests. That’s the ideal renter situation. When I was renting the landlord was sometimes responsive, sometimes not.
    4. Would rather spend money on something else. Vacations, wine, restaurants, cars, B&O phone, Sprinkles cupcakes, you name it. (did I miss anything?)

    So, combine “no particular desire to own” with “there’s no short term financial benefit to buying” and there you have it.

    Burbed, regarding the CUSD.
    Consider the ethnic makeup of the senior population of CUSD. Consider the ethnic makeup of the students of CUSD. Not the same. Could cause conflict.

    The irony of course is that the high test scores generated by the newer residents and their children is a big contributor to the property value that the seniors enjoy when they sell their houses.

  95. sv_newbie Says:

    DreamT, so can you pls elaborate more on what are the price range you bought into and what was the rent you considered as alternative? (you can scale both the numbers by some factor if you don’t want to make them public :) ).

    I’m in same boat as you. I’m willing to pay some premium for intangible gains associated with buying. But, how much, that is the question!

  96. SHBH Says:

    I’m in same boat as you. I’m willing to pay some premium for intangible gains associated with buying. But, how much, that is the question!

    There is also the timing factor. Do you want the instant gratification of having the intangibles now, knowing the mid to high end market will likely continue to slide over the next few years, or are you willing to delay that for a few years to get a better deal.

    Personally, I am looking at RBA locations around mid-Peninsula which are down from the peak but still 20-30% more than what I am willing to pay.

  97. zanon Says:

    Good thing RE does not do rent vs buy. Premium right now for ownership is about 200%-300%. That’s some pretty tangible intangible.

  98. Real Estater Says:

    DreamT says,
    >>#92 – I typically take a conservative approach and I consider myself to be both risk-adverse and opportunistic.

    That is also fine. I think the starting point should be an understanding that you want to own a home. The only question is how to make it work.

  99. DreamT Says:

    sv_newbie – certainly. I bought a 3/2 Santa Clara CUSD in the low $800k with 10% down and 6.125%. My basis of comparison at the time was a $2500/month rent. Would I have rented for 10 years, I would have paid $300k. The homeownership calculation with equity buy-down, tax-deductible interest and taking into account property tax (14 payments instead of 12) results in a total 10-year cost of $377k, which is about 26% premium – greater than 10% but in line with what I’m comfortable with. For the same calculation, with my previous purchase (condo in Mountain View in 2002 using $1875 as a basis) it was actually more costly for me to rent, even without taking into account the equity appreciation that ensued, and even for the short term (4 years instead of 10).

  100. Real Estater Says:

    >>There is also the timing factor. Do you want the instant gratification of having the intangibles now, knowing the mid to high end market will likely continue to slide over the next few years, or are you willing to delay that for a few years to get a better deal.

    The market has a chance of going up as much as it has a chance of going down. What you’re talking about is speculating and wishful thinking. When the Dow was at 6500, some people were saying it’s headed to 4500. More people thought it would “likely continue to slide”. How many people said it would rebound by 25%?

    A lot of things can happen. Interest rate can go up, and you may end up not getting a better deal.

    All things being equal, buying now is better than buying later. For 20% down, you get 100% of the intangible benefits right away. There’s your “timing factor”.

  101. nomadic Says:

    Careful about your stock predictions. There has been a massive amount of insider selling. Senior execs apparently think they should cash in now, even though the market is still below where we were a year ago.

    http://finance.yahoo.com/tech-ticker/article/266040/%22Massive-Insider-Selling%22-Pure-Supply-and-Demand-Makes-a-Bears%27-Case;_ylt=AvZ2D_s6H6_rqJM_EcanijRl7ot4?tickers=^DJI,^GSPC,AMZN,BBBY,DHR,GILD,YUM

  102. Real Estater Says:

    DreamT says,
    >>. I bought a 3/2 Santa Clara CUSD in the low $800k with 10% down and 6.125%.

    You already won, not just because you got the appreciation, but because you’re able to achieve 100% more leverage than what is possible today with 20% down. Things got even better as rates came down.

  103. Real Estater Says:

    >>Careful about your stock predictions.

    I’m not making any prediction. I’m just looking back and stating what happened.

  104. A. Lewis Says:

    Sorry, I’m going to back up to an earlier point in the thread by RE in #65:

    “Let me repeat. RBA homes are not losing 20-30% from 2005 price levels. This is unfounded hysteria.”

    You’re wrong. I contradict you. RBA homes are losing 20-30% or more from 2005 price levels. I know it’s true. It’s a fact. This is the premise that backs up everything you say, and it’s wrong.

  105. Real Estater Says:

    >>Would rather spend money on something else. Vacations, wine, restaurants, cars, B&O phone, Sprinkles cupcakes, you name it.

    This is why a lot of renter end up not having much net worth when they retire. They see the money in their bank account, and they go spend it without much discipline. If instead they used the money toward a home, a small percentage of the equity they build up can buy them all of those things.

  106. SHBH Says:

    All things being equal, buying now is better than buying later. For 20% down, you get 100% of the intangible benefits right away. There’s your “timing factor”.

    Another cliché realtard statement made by RE that is designed to stir up emotions.

    I am not wasting my time to argue with a fictional character.

  107. anon Says:

    “Your approach is fine, although I would’ve not bothered with any rent vs. buy calculation. The numbers won’t work out in the short term; it would only deter you from owning a home. Over the long haul, the result nearly always surprise to the upside.”

    Lol – of course you wouldn’t bother.

    You’d rather stick your head in the sand. People like you are the reason the bubble came to be.

    Oh, and there is nearly always a “surprise” to the upside. A surprise. Kind of like when you reach the center of a tootsie-pop.

    Don’t do rent-to-buy calculations, people. Count on the surprise!

  108. Real Estater Says:

    Just to add one more point on timing. Often times you cannot wait to utilize the intangibles. If you have kids in school, you can’t keep moving, and you need good schools right away.

  109. BuyersAreIdiots Says:

    #106

    Well said.

    Real Excreter, there is not a single individual on this forum that takes anything you have to say at face value. Not one. You are the Sarah Palin of burbed. A clueless blowhard that spouts nothing but endless cliches while having no rudimentary knowledge of economics or finance. Every post you make is simply a dodge; there are never any facts to back up your claims. Merely unfounded assumptions, propaganda and worthless statements mired with NAR catch phrases. Whenever you are pressed to back up your assertions, you invariably respond with statements like “I already talked about that” or “Go ask your grandmother”.

    Now I can come to only three conclusions pertaining to your identity:

    1) You are a realtor in disguise that is attempting to counter the obvious negative trend that is affecting Bay Area housing and are trying to undermine logic with worthless statements. Largely due to the fact that your livelihood is threatened.

    2) You are a bubble sitter; an individual that purchased an inflated property and you are now stubbornly trying to adhere to the ideal that you made the right decision and nothing is wrong.

    3) You are merely a troll out on the net, trying to get his jollies by stirring up controversy and baiting folks into responding to your worthless tripe.

    Honestly, I am not sure which of those three you likely are. But if I was a betting man, I would say you are number 1 in the list.

    Now I am not certain what you are hoping to accomplish here other than just get under everyone’s skin or provide free and moderately entertaining comic relief. But in the end, if you actually ARE a realtor, you are doing yourself and those around you a dis-service since you are so transparant and so inept, that even the third grader can see through your BS.

  110. Real Estater Says:

    A. Lewis,
    >> I contradict you. RBA homes are losing 20-30% or more from 2005 price levels.

    You’re quite some distance from Silicon Valley, and you don’t get the market. Like in Bob’s case, your observation may be true based on what you see around you, but it is simply not reality here.

    How about let’s pick out a few people who live down here and see if they agree with the assertion that RBA homes are down 20-30% from 2005 price levels?

    Nomadic, DreamT, madhaus: Please provide your input.

  111. Real Estater Says:

    Good news:

    Leading economic indicators up more than expected

  112. R Says:

    “The market has a chance of going up as much as it has a chance of going down.”

    Ha. You might be the only person in the country holding that view. Which I guess is fine, although I still don’t see you putting your money where your mouth is. I still can’t understand why your planned late 2008 purchase has still not occurred. With the bottom according to you being in Jan 2009, you’ve lost some money but holding out. It is odd to me that you haven’t followed your own advise and purchased.

    Care to bet that the market goes down from here? Although you say it’s 50/50, I’ll even give you 55/45 odds.

  113. Real Estater Says:

    More good news:

    Jobless benefit rolls drop sharply

  114. R Says:

    BAI, post of the day (#109). Well done, well said.

  115. A. Lewis Says:

    #88/99 DreamT, and #94 Si02, thanks for the valuable comments and info, and providing actual substance to the thread, unlike, for example comments #65 and #104.

    Just a few more points – there are intangibles to renting. We all know the intangibles to buying, b/c that’s what’s talked about and made part of the stereotypical American dream. But many renter’s advantages have been talked about here, and people often ignore them. I don’t think they should.

    I’ve always granted a premium for buying over the cost-to-rent, but it’s not an infinite premium. DreamT was comfortable with his premium – that’s cool. And he’s happy about his home purchase. That’s what matters.

    I’ll go ahead and contradict Bob from earlier – in my world, it’s not the money in our pockets at the end of the day. It’s what kind of life we’ve had.

    If you ruined yourself to own a house, stressed about it endlessly, ended in divorce, bankruptcy, or heart attack at 58, then it was a bad move.

    If you stretched a little, got the house you loved, made it a home, your spouse felt secure and you had a stable nest to raise your kids, loved your neighborhood, and had a paid-off asset to leave to your family, than it was a good move.

    If you rented, found nice homes in good neighborhoods, got your kids into great public schools, kept you and your spouse feeling financially secure, didn’t mind the two moves in 20 years that happened when the landlord decided to sell the place, and had more to spend on your retirement b/c of what you wisely saved, and the rent/own ratio was too high, than it was also a good move.

    You see what I’m trying to tell with these little stories?

    Buying can end happy, or it can end badly – or somewhere in between. Same with renting.

    The prices are SO high, and the stakes so high around here, that it is nothing like a no-brainer whether you should rent or buy for your family. And it’s been a volatile market, so the ‘right’ answer has moved all over the place the last 10 years. And it’s moving fast somewhere right now.

    I’ll just go wild and say I’m in complete agreement with one of Real Estater’s comments #100:

    “All things being equal, buying now is better than buying later.”

    That’s true if you are really strict about all things being equal. If price/rent, interest rates, appreciation of the home, your future salary history, the quality of the school districts, and your job, remain constant for the next 40 years, and you can afford the home, think the owning premium is fair (like DreamT did), than you are better off buying now.

    Thing is, RealEstater, like many of us have been saying since, oh 2006 or so on this blog, things aren’t equal. They aren’t the same. They’re changing fast.

    And just ’cause you’re in denial doesn’t mean many people don’t regret the decision to buy they made the last few years.

    And many more are going to come to regret it.

    Others don’t regret it – others are happy, but I’m damned sure not going to do something I regret to the tune of six or seven digits.

  116. Real Estater Says:

    R,

    Don’t get confused. The discussion here is around buying an owner occupied primary residence. I already followed my own advice and bought it many years ago.

    Buying an investment property is a different game. There’s no urgency to capture the intangibles since I won’t be living there. Currently the interest rate for an investment property is in the mid 6% range. I need that rate to come down to make the numbers work.

    Please don’t repeat the same question over and over, as it has been addressed several times already.

  117. nomadic Says:

    Oh, and there is nearly always a “surprise” to the upside.

    Exactly anon. And think of the “surprise” the underwater buyers of 2006-2007 got for their troubles. ;-)

    .
    I wonder if the jobless numbers include people on work sharing programs (where hourly employees get partial UI benefits after getting their hours cut 10% or more). Half of my company is on it now.

  118. A. Lewis Says:

    #110 – don’t ask Nomadic, DreamT, & madhaus to make your case – make it yourself!

    YOU be the one to try to make a point. Defend your statement that prices have not dropped, and I will get to be the one to criticize your data and your methods.

    If your arguments hold up to my criticisms, the others can judge you the winner. But not before then, and not by your own assertion.

    Let’s try the shoe on the other foot, big talker!

    Speaking of metaphors, madhaus, I smiled when you asked me if I read The New Yorker. I’ll be coy:

    I read The New Yorker for the pictures (cartoons), and I read Playboy for the articles. Is that funny?

  119. A. Lewis Says:

    #116, if you can’t make an investment property work with a 6% mortgage, you don’t know what the hell you’re doing.

    OR, the prices must be way too high! I doubt you’ll admit either case.

    The vast majority of mortgages in the last 80 years were made for more than 6%!

  120. PA-S Says:

    I bought in PA in Nov 2005, I was at shock when I learn I might have a 30% gain by 2007, I was preparing to lose money when I bought. Now I think I am still above the water, I and my daughter are having a good time in a home at a comfortable neighborhood; I can say I am very luck. To me to buy a house is about “Is it worth to me or not” and” Can I afford it or not” you need have both to be happy. I did rent a cottage out to help with the mortgage. Some other may consider my house is not too much a house. But we work on it and it look nice to us.

  121. nomadic Says:

    “The market has a chance of going up as much as it has a chance of going down.”

    Frankly, I’m shocked RE would admit to a 50% chance of the market going down. WTF? We bottomed last quarter, right?

    I’m sure the comment was unintentional.

  122. sv_newbie Says:

    In other news, it may or may nor rain tomorrow here in valley. So according to excellent statistics I learned on burbed, there is 50% chance that it will rain. Aha.

  123. BuyersAreIdiots Says:

    Excerps from the articles Real Excreter linked to:

    “While conditions are in place for a rebound later this year, “prospects of a recovery are still fragile,” said Sal Gautieri, economist at BMO Capital Markets. “There’s no guarantees.””

    “However, Goldstein said the job market will take longer to rebound.”

    “Some economists say the recession may be followed by a “jobless recovery,” as skittish employers remain reluctant to hire, even as their business improves. That shows “how deep a hole we’re in,” Goldstein said.”

    So how many homes will unemployed people be buying? Me thinks, not many.

  124. PA-S Says:

    DreamT did you do a refinance? I did mine, the rate I have is 4.25%… It makes a big difference.

  125. Pralay Says:

    Pralay, would you buy under certain circumstances in the south bay or peninsula? If yes, do you have a timeline, price range and a specific area in mind?
    —–

    We are not thinking in peninsula as we both work in south bay. I do have specific area in mind, but considering the fact that there is a good amount of volatility in market (including so-called RBA), my educated guess is that the whole landscape will change in next few years. And I could see the trend in past two years and I don’t see any sign of reverting this trend anytime soon (unlike RealExcreter’s assumption of Q1 being bottom). Given that volatility of market, there is little downside of waiting and lot bigger upside. In addition, given our personal circumstances (and that’s the most important factors, considering that fact that we don’t live in crampy apartment), we are not in hurry to get the best deal out from the market. Suckers do that. We will rather wait for dust to settle.

  126. nomadic Says:

    newbie,

    “The market has a chance of going up as much as it has a chance of going down.”

    “as much as” meaning “equal to” meaning “50/50″

    …unless you’d like to argue we should allocate a probability of it staying exactly the same as it is today.

  127. Pralay Says:

    Your post is not very different from my positions:
    ….
    – Homeowners come out ahead in the long run (RE is a long term investment).

    —–

    Not very different!!! I don’t think DreamT would agree with your “right time to buy” bullshits (e.g here, here and here) which you are constantly spewing here.

  128. R Says:

    @116, so I guess the take away from your position is that you believe prices are such that buying a personal residence makes sense right now but that buying an investment property does not. That’s fair enough.

    I disagree that buying for any purpose makes sense at today’s still inflated prices but at least I understand the seeming contradiction.

  129. Pralay Says:

    You’re quite some distance from Silicon Valley, and you don’t get the market.
    —-

    Translation: I am bailing out, but with an excuse.

  130. DreamT Says:

    Pralay, yes if you’re satisfied with your current living amenities and neighborhood, there’s much less of an incentive to buy, and certainly not purely for financial reasons.
    PA-S, can’t refinance at the moment. It’s the price I have to pay for our extremely flexible lifestyle. I’d be happy to be back on the 4.5% I had in 2003, but will probably miss the window of opportunity.

  131. anon Says:

    “How about let’s pick out a few people who live down here and see if they agree with the assertion that RBA homes are down 20-30% from 2005 price levels?

    Nomadic, DreamT, madhaus: Please provide your input.”

    Whoah whoah whoah, excrement.

    Those people have RBA homes now?

  132. R Says:

    “#116, if you can’t make an investment property work with a 6% mortgage, you don’t know what the hell you’re doing.

    OR, the prices must be way too high! I doubt you’ll admit either case.

    The vast majority of mortgages in the last 80 years were made for more than 6%!”

    Exactly. I am just happy RE at least explained (or actually rationalized) why he has not purchased his rental yet. The reason he gave for not purchasing (essentially, the numbers don’t work) is the same reason that renting is better than buying at current price levels, but at least he answered without dodging.

  133. Pralay Says:

    Please don’t repeat the same question over and over, as it has been addressed several times already.
    —–

    LOL! Evetything is explained in past.

  134. sv_newbie Says:

    #126
    Nomadic, I was referring to comments to which you referred :)
    RE listed 2 events, and by default, assigned equal probabilities to both (which you correctly put mathematically).
    Actually not so uncommon mistake.

  135. R Says:

    BTW Pralay, my situation is similar to yours. I am renting a nice place in the “RBA” for 2k a month that the poor owner purchased in 2004 for 825k. Ouch. Place is probably worth 725k now and dropping daily. My guess is that it will probably drop to around 550k based on historical prices in the neighborhood and rental prices.

    I could probably afford to purchase now but see absolutely no reason to purchase in a falling market. For a first time home buyer like myself, it would be financial suicide and keep me a prisoner in the house for many, many years due to having no move-up equity. No thanks, it just makes zero sense.

  136. Pralay Says:

    Buying an investment property is a different game. There’s no urgency to capture the intangibles since I won’t be living there. Currently the interest rate for an investment property is in the mid 6% range. I need that rate to come down to make the numbers work.
    —-

    Come on! You said “right time to buy” for investment property in Jaunary 2008 (not 2009).

    Yes, now is the right time to buy even an investment property.

    Secondly, you keep saying that real estate is a long term investment. Why do you care for 6% interest rate? RBA home price doubles in every 10 years anyway, right?

  137. nomadic Says:

    newbie, I guess we agree the statement is absurd. :-)

  138. Pralay Says:

    [Formatting problem. Reposting it again.]

    Exactly. I am just happy RE at least explained (or actually rationalized) why he has not purchased his rental yet.
    ——

    I would not take his word about buying investment property seriously. As I said before, his words are as reliable as Stephen Baldwin moving to Canada after Obama’s victory.

    There are hell lot of contradictions about his real estate investment or his investor status). For example, here he talks about being real estate investor.

    In the BA, if there’s softness in the market, investors wills snap them up. I know this because I am one of these investors.

    Here he even talks about his investment strategy (as if he executed his strategy MANY times in past):

    I don’t invest in fly-over country. I only invest in places where property values always go up.
    ….
    I don’t use creative financing. If I can’t close a deal with regular financing, I don’t buy the house.
    ….
    I follow best practices. I make sure there is money left over to cover any unexpected events after buying a house.

    In above post he implies that he has lot of investment properties (and experience in real estate), when in reality he has none.

    I think we should call him Unreal Estate Investor.

  139. BuyersAreIdiots Says:

    I would not take his word about buying investment property seriously. As I said before, his words are as reliable as Stephen Baldwin moving to Canada after Obama’s victory.

    And to add additional irony: Stephen Baldwin’s house is going into foreclosure!

    http://www.koinlocal6.com/mostpopular/story/Stephen-Baldwins-home-in-foreclosure/8Fq3n1InIUyP782vk0fWLQ.cspx

    Guess the poor shlep didn’t realize he had to buy in the Real Bay Area….

  140. madhaus Says:

    Pralay, you beat me to last year’s quotes again. Can you find the one about his trip to look at investment property (which he then contradicted himself by saying he doesn’t buy anywhere but the RBA)?

    A. Lewis, I am laughing at your reading choices. I read everything in the New Yorker except the dance reviews. Heck, I even read the sports essays. And Playboy used to be right up there with the New Yorker for quality and payments for cartoons (albeit for a totally different audience). I still remember the one of the couple in bed with the caption “What do you mean ‘Will I respect you in the morning?’ I don’t respect you now!”

    Hey, doesn’t that sound like our attitude toward a certain poster?

    Anyway, once Tina Brown took over the New Yorker, she started buying cartoons of naked folks in bed, but the furnishings were a little more high-end.

    BAI, you nailed it. Of course at one time or another, almost all of us have said the same thing. :)

    nomadic, I read your article. I’d like to hear from steve on this, but I don’t remember much talk of banks except in my international finance class.

  141. SHBH Says:

    As I said before, his words are as reliable as Stephen Baldwin moving to Canada after Obama’s victory.

    He did recently lose his home in a foreclosure. Maybe he is moving to Canada after all :)

    BTW, how did he manage to own $824,000 on a house he bought for $515,000? Does that mean he has been using it as an ATM over the years?

  142. PA-S Says:

    In 1993 down market, I bought a beach property. I rented it out($1900), and lived with a 90 years old landlady for $200/month. I did the same thing in 1997. I think that is the reason why I can afford the PA house (from rent and work). The 1993 is about x 4 and the 1997 is x 3 now. I learn all the repairing works including put in new or refinish hardwood floor, drywall, painting and replace routed wood, minor elect and plumbing etc(internet help). My take is buying the cheepest house and bargain to the bone~30% off the market price(no major structure problems) in the best neighborhood I think I can not afford, and bring it back myself. Some of my friends think i should not work like a labor.But I do like to work with my labor and it is green.

  143. Pralay Says:

    Can you find the one about his trip to look at investment property (which he then contradicted himself by saying he doesn’t buy anywhere but the RBA)?
    —-

    You mean his Vegas trip? I guess he was planning to buy investment property in Lake Las Vegas.

  144. Real Estater Says:

    Pralay says,
    >>Come on! You said “right time to buy” for investment property in Jaunary 2008 (not 2009).

    And that was absolutely the right call. Thanks for bringing it up again! If you talk to WillowGlenner, he can tell you first hand about his experiences. The bottom for investment properties happened in 2008. As you saw in various news articles, now days investors are lining up to buy such properties. Multiple offers and overbidding are common.

    Having said that, my target property is different. I’m not looking for the typical investment property per se, because I choose not to deal with low end renters.

    All of these topics have been covered before (Indeed everything was discussed in the past). The question is why you repeat the same distortions over and over?

  145. Real Estater Says:

    Pralay says,
    >>In above post he implies that he has lot of investment properties (and experience in real estate), when in reality he has none.

    I implied nothing. You are the one fabricating these assumptions. If you already have a wife, would you still be looking for one?

  146. Pralay Says:

    All of these topics have been covered before (Indeed everything was discussed in the past). The question is why you repeat the same distortions over and over?
    —-

    LOL! RealExcreter explained everything in past – for one more time. :)

  147. Pralay Says:

    I implied nothing. You are the one fabricating these assumptions.
    —-

    You are a real estate investor with only primary residence. Is that a correct assumption? :)

  148. Pralay Says:

    Having said that, my target property is different. I’m not looking for the typical investment property per se, because I choose not to deal with low end renters.
    —–

    This one takes the cake.

    Guys, RealExcreter said it – it is “right time to buy” for ONLY typical investment properties.

    If you not looking for non-typical property this is definitely NOT “right time to buy”. :)

  149. madhaus Says:

    Yeah, reminds me of some slippery politicians:

    Q: When did you realize you had broken the law?
    A: No comment.
    Q: Did you take the money knowing that such an action was illegal?
    A: No comment.
    Q: Did you attempt to return the bribe once your attorney told you your actions were a felony?
    A: No comment.
    Q: Why did you accept a payoff from a known organized crime figure?
    A: I have already answered all those questions.

  150. Pralay Says:

    LOL!

  151. nomadic Says:

    Let me be the first to let you know, RE: if you need an interest rate lower than 5% (because even when rates were around 5.25% for investment properties you were waiting for a mythical 4% interest rate), then you are now officially priced out forever. Rates are heading up again.

    As rates increase, the projected average lives of mortgage bonds and loan-servicing contracts lengthen as potential refinancing drops, leaving holders with portfolios of longer- than-anticipated durations. Investors then may seek to pare durations by selling longer-dated Treasury securities, mortgage bonds and interest-rate swaps, sending yields even higher. The opposite happens when rates decline.

    While the mortgage-bond yields have fallen from 5.07 percent on June 10, the high since the Federal Reserve announced plans to buy home-loan bonds in November, they had previously risen from 3.94 percent on May 20, pushing up loan rates from record lows. The increase is jeopardizing the Fed’s effort to use lower borrowing costs to stabilize home prices and curb the U.S. recession.

    http://www.bloomberg.com/apps/news?pid=20601087&sid=akdZlvG2Drc8

  152. Real Estater Says:

    nomadic,

    Where did I say I’m waiting for interest rate lower than 5%? There’s a whole lot of room between 6.5% and 5%, isn’t there?

  153. Pralay Says:

    Nomadic,
    You are silly. RealEstater is waiting for 4%.

  154. Real Estater Says:

    Once again, Pralay uses old newspaper to check the weather. Getting boring….

  155. DreamT Says:

    Isn’t that the premise between “Where did I say”? Older posts? This is not even twisted logic, this is complete hypocrisy.

  156. DreamT Says:

    The premise behind, not between. As the joke says, what is the difference between a snake?

  157. Pralay Says:

    LOL! It seems RealExcreter’s “right time to buy” for his FIRST investment property keeps shifting in future.

  158. nomadic Says:

    Thanks, guys (DT, Pralay). At least you are both capable of understanding a simple point. And bonus! – I didn’t have to find that 4% quote. :-)

  159. Real Estater Says:

    Pralay says,
    >>In addition, given our personal circumstances (and that’s the most important factors, considering that fact that we don’t live in crampy apartment), we are not in hurry to get the best deal out from the market.

    Complacency can be one’s worst enemy. Status quo is always the easiest way out. This is why some people always get stuck doing the same job.

  160. Pralay Says:

    And I don’t have to get advice from an used car salesman who has nothing but to say except parroting NAR “right time to buy”.

  161. Real Estater Says:

    Pralay says,
    >>my educated guess is that the whole landscape will change in next few years.

    Your educated guess based on what? How do you know the landscape if you don’t even go look at houses?

    >>We will rather wait for dust to settle.

    LOL. How many years have you been waiting for the dust to settle? Is that your RE strategy?

  162. Pralay Says:

    How do you know the landscape if you don’t even go look at houses?
    —-

    You mean “pulse of the market”, right? Counting number of visitors? ;)

  163. Pralay Says:

    How many years have you been waiting for the dust to settle?
    —–

    If I compare with this guy, not much.

  164. nomadic Says:

    You’re a fine one to question waiting for the “dust to settle.”

  165. Pralay Says:

    You’re a fine one to question waiting for the “dust to settle.”
    —–

    Apart from “dust settle” let’s find all his other excuses:

    Feb 2008 – jumbo ceiling:

    Most likely I’ll make my move after the government lifts the jumbo loan ceiling.

    Nov 2008 – holiday season:

    With the holiday season here, I’m probably going to postpone til the next Spring buying season.

    Dec 2008 – 4.5%

    Meanwhile, as luck would have it, the word on the street is that the Treasury is considering a plan to lower 30 year fixed mortage rate to 4.5% for new purchases only (no refinances). Therefore, there is no way I will buy until the dust settles on this one.

    Poor RealEstater! Stars never get lined up and dusts never settle for his investment property.

  166. Real Estater Says:

    Pralay says,
    >>We are not thinking in peninsula as we both work in south bay.

    The dust has already settled in San Jose. What’s your excuse for not even looking?

  167. Pralay Says:

    What’s your excuse for not even looking?
    —-

    I am waiting for stars to line up – just like RealEstater. :)

  168. anon Says:

    Get over it, excreter.

    In general, San Jose is trash. (Willow Glen included)

    Would you buy something there?

  169. Pralay Says:

    And RealExcreter does not advise to buy there either.

  170. anon Says:

    Ah, but Pralay, further down you quote him saying:

    “Like I said, having something is better than having nothing at all. In other words, having a house in San Jose beats renting in Palo Alto any day!”

    Hypocrite?

    Yes.

  171. Real Estater Says:

    anon says,
    >>In general, San Jose is trash. (Willow Glen included)

    Would you buy something there?

    San Jose is a huge area. I wouldn’t say it’s all trash. For a first time buyer like Pralay who works in the South Bay, I don’t see why it should be ruled out.

  172. Pralay Says:

    I don’t see why it should be ruled out.
    —–

    You are incapable of seeing too many things. And I don’t need to mention about your math, spelling, reasoning and logic problems.

  173. Real Estater Says:

    More evidence the dust has settled:

    Silicon Valley home prices rise in May as higher-end market improves

    - the median price of Silicon Valley houses rose 9 percent in May, the biggest month-over-month jump since March 2000, according to a report released Thursday.

    - Since hitting a low of $420,000 in January, median house prices in the county have risen every month. That trend, said Quincy Virgilio, president of the Santa Clara County Association of Realtors, is “a good indication that our market is starting to stabilize.(i.e. the dust has settled)

    - “Folks who see the value in the higher end are jumping into the market,”

    - current “pending” sales — those not yet finalized — outnumber homes for sale this week

    - Move-up buyers looking for a bigger house or a better school district tend to do it in the spring.

  174. Real Estater Says:

    Pralay says,
    >>You are incapable of seeing too many things.

    I saw and reported the market trend before it became news. Recall how I told everyone about the pick up in sales a month ago? You are seeing the results now. Add another win to my consistent track record!

  175. Pralay Says:

    the median price of Silicon Valley houses rose 9 percent in May
    —-

    Useless aggregate data.

  176. Real Estater Says:

    To paraphrase Mark Twain:

    Reports on the dearth of move-up buyers is greatly exaggerated!

  177. anon Says:

    They are not, excreter. I would say it takes a mediocre person like yourself two moves to get to PA. Those moves may come at a rate of one per five years.

    The entry level homes form the foundation for the market. The upper end has had its “knees cut out from under it” and it is only a matter of time before gravity pulls it down.

  178. Pralay Says:

    Recall how I told everyone about the pick up in sales a month ago?
    —-

    Those “sales is up” news you are giving from March 2008 (not 2009). Nothing new here.

  179. anon Says:

    One more thing to add:

    When you see your sale pending signs, you don’t know the first thing about the buyers. For all you know, those could be “move down” buyers – people who are selling a more expensive home that they stretched just a bit much to obtain and now want to make their payments a little bit easier for the long haul.

    You’re biggest problem, excreter, is that you don’t know what you don’t know. You don’t even appear to realize that there are things you do not know.

  180. Real Estater Says:

    SF Gate coverage:

    Good news for Bay Area home prices

    Many real estate professionals attribute the price improvement and increasing sales to growing eagerness among buyers and investors to take advantage of bargain home prices, still relatively low interest rates and government and industry incentives.

    “They’re confident again and think, ‘Boy, when is this opportunity going to come again and also, when is it going to be taken away?’ “

    In summary: The dust has settled, and the stars are lined up. Now is a good time to buy.

    Are you still in denial, Pralay?

  181. anon Says:

    Did you read past the title, excreter?

    From the second paragraph:

    “Unless, of course, it’s not. The data could just as easily reflect growing distress in the high-end market that is forcing more well-to-do owners to unload their homes, distorting the statistics with discounted but still relatively expensive properties and foreshadowing greater pain to come.

  182. Pralay Says:

    - Move-up buyers looking for a bigger house or a better school district tend to do it in the spring.
    ———–

    Exerceptor’s exercept is always interesting – especially when he exercepts a sentence partially to make his point. Here the complete one:

    Part of the reason for the uptick in higher-priced sales is seasonal: Move-up buyers looking for a bigger house or a better school district tend to do it in the spring.

  183. nomadic Says:

    I thought we had established the uselessness of median prices long ago? Does that statistic include San Jose?

    Further, are prices actually rising, or now that many of the lowest-end homes have sold in foreclosure, the mix now includes a proportionately greater number of mid-range homes?

  184. Real Estater Says:

    anon says,
    >>For all you know, those could be “move down” buyers – people who are selling a more expensive home that they stretched just a bit much to obtain and now want to make their payments a little bit easier for the long haul.

    Brilliant! People are going to pay 6% commission to move down when they can simply refinance?

  185. anon Says:

    Wow, you must be reading my mind. See that comment above about where I discuss move down buyers?

    From your article:

    “Mortgage brokers say the increasing number of jumbo transactions has less to do with an increased willingness on the part of banks to issue those big loans than with growing eagerness among wealthier owners to sell their homes, even at discounted prices.”

  186. anon Says:

    Does refinancing decrease your principal?

  187. Pralay Says:

    Are you still in denial, Pralay?
    —-

    I must believe those Realtards. :)

  188. anon Says:

    “California mortgage default notices, the first step in the foreclosure process, hit a record high in the first quarter, according to DataQuick.”

    Two words: Foreclosure moratorium.

  189. anon Says:

    “Let’s artificially constrict supply so that Joe the plumber steps up to be a bagholder,” says the government.

  190. nomadic Says:

    The article made my points for me too:

    In recent months, sales of previously foreclosed homes in the Bay Area’s less expensive communities have formed a large portion of sales, which has helped tug the median price down in many counties. But in May, sales of more costly homes bounced back a bit, nudging the median price up.

    According to DataQuick, homes costing $800,000 or more accounted for 19 percent of the 1,212 sales of previously owned houses in Santa Clara County in May, the highest percentage since December. Houses costing less than $400,000 fell to 38 percent of sales in May, the lowest level since December.

    Sales of foreclosure properties also dropped as a portion of total sales. Of all home sales in the county last month, 35 percent had been foreclosed upon sometime in the previous 12 months. That was down from a high of 45 percent in January.

    So, median rises while prices continue to ratchet down on the high end. (See anon’s #185 for quote.)

  191. Pralay Says:

    I thought we had established the uselessness of median prices long ago?
    —-

    It was useless when it was going down. Just like metrics like SP/LP, low inventory, price per sq-ft became obsolete now.

    But from today, median is useful.

  192. Pralay Says:

    So, median rises while prices continue to ratchet down on the high end.
    —-

    Don’t forget what RealExcreter was saying about median when it was going down.

    Median price is only one measure, subject to the mix of properties sold under a low volume climate.

  193. Real Estater Says:

    Check out the Bay Area spirit in this reader response:

    >>I am in Switzerland this week on holiday – and the housing and rent costs are about half of what they are in the SF Bay Area.

    Of course it is. In Detroit, you can buy a house for $10K. So what’s your point? btw, this weekend, I’m going to GG bridge for a bike ride. We’re going to lunch at Maggios in Santana row afterwards and spending the evening at the board walk in Santa Cruz before calling it a day in our beautiful home in Aptos with an ocean front view. There is also an outdoor pool nearby which I enjoy occasionally. I can pretty much do that 12 months out of the year because weather is usually cooperative. Oh, and I also have season ticket to Kirkwood in Lake Tahoe for skiing. Next weekend, I’m going for a bike ride in PG (Pacific Grove) and have dinner at the wharf in Monterey pier. I can do this 12 months out of the year.

    What are you going to do in Switzerland this December? You still want to know why it so expensive in the bay area ;)? I didn’t even mention the abundance of big name corporate companies like Google, Adobe, Intel, Oracle, … in San Jose’, Mtn View, Stanford, … and so forth. Any more questions?

  194. anon Says:

    Real estater,

    You have been annihilated.

  195. Pralay Says:

    btw, this weekend, I’m going to GG bridge for a bike ride. We’re going to lunch at Maggios in Santana row afterwards and spending the evening at the board walk in Santa Cruz before calling it a day in our beautiful home in Aptos with an ocean front view.
    —-

    LOL! That sounds like RealEstater’s twin.

  196. Real Estater Says:

    Think about the buy side. The demand is back. The move-up buyers are coming out. These people have money and jobs.

  197. DreamT Says:

    Maggios? I knew something didn’t add up in this post.

  198. zanon Says:

    RE: What move-up buyers? There are no move-up buyers. When the bank sells a REO, who is the moveup buyer?

  199. Enough Estater Says:

    RE, enough garbage spewing. You really make your profession look bad and are not doing anyone any favors by throwing crap against the wall like a monkey. All the lies, spin, and carefully selected half truths haven’t convinced a single person to buy a home, just convinced them to use redfin when they do.

  200. BuyersAreIdiots Says:

    #199

    Well said.

    As I mentioned in a previous post, Excreter (if he is a realtor) is doing himself and his profession a dis-service.

    I think the major problem with realtors is they are naturally so susceptible to BS due to an inherent lack of intellect, that they are often at a loss for words and actions when confronted by individuals who are intelligent and have exercised due diligence. And that is frustrating to them. They continue to spout their worthless nonsense over and over again, hoping that by some grace of God, they will be able to pull the wool over one more saps eyes.

    It reminds me very much of uber religious zealots who continuously preach their gospel regardless of all the evidence that exists to the contrary of their beliefs.

  201. nomadic Says:

    They continue to spout their worthless nonsense over and over again, hoping that by some grace of God, they will be able to pull the wool over one more saps eyes.

    Just one flaw with your post, BAI. You imply they are knowingly trying to mislead people. I think most truly believe what they are saying. Just like the zealots you mentioned. :-) That leads back to the intellect argument.

  202. BuyersAreIdiots Says:

    #201

    Point well taken nomadic. :-)

    I guess it comes down to two possibilities: willful ignorance or blatant stupidity. Not sure which is worse. :P

  203. Pralay Says:

    Sold for 1280K (not $1.408M). Hopping four year appreciation for a RBA property.

  204. DreamT Says:

    you mean, like a frog?


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