bay area too expensive
It’s Search Engine Thursday.
Recently someone found this site by searching for: bay area too expensive
The answer is: Yes. And we should be thankful that it is.
Studies show that people want goals… no… they need goals to aspire to in order to have fulfilling lives.
Living in the Bay Area provides those challenges. The fact that housing here is 40% more expensive, that groceries are often 12% more expensive, and our fine 9.75% sales tax and 9.3% income tax and 1% property tax, and the fact that salaries doesn’t meet these higher level of expenses, ensure that these challenges persist.
What doesn’t kill you makes you stronger, and the Bay Area produces the strongest, bravest, smartest, people in the whole world.
So yes. Let’s celebrate how expensive the Bay Area is. Otherwise, we’d be full of dumb, self loathing people, like the rest of the world.
We’re special.
October 15th, 2009 at 8:27 am
The people here are special, but housing has never been.
October 15th, 2009 at 9:24 am
Yep, we’re special. After reading that post I’m also convinced we’re freakin’ insane.
October 15th, 2009 at 11:21 am
After reading that post I’m also convinced we’re freakin’ insane
So will legalizing pot make us more likely to chase bubbles or will it mellow us out a tad?
October 15th, 2009 at 1:11 pm
It should mellow us out and help keep bubbles down – too relaxed to go chasing Ponzi schemes. But look out for a bubble in pot prices post-legalization. Don’t buy too much stock in pot companies!
October 15th, 2009 at 4:17 pm
“the Bay Area produces the strongest, bravest, smartest, people in the whole world.”
produces? What’s the % of companies started by immigrants again?
or were they all dumb before they showed up here?
October 15th, 2009 at 4:40 pm
Burbed, I’m a sarcastic bastard myself, but sometimes your level of dark, evil, brutal sarcasm impresses even me. Nice post! I bow to the master.
October 15th, 2009 at 5:11 pm
Ah, RealEstater finally features in San Francisco Chronicle. Not sure why they forgot to mention the Porsche.
October 15th, 2009 at 5:11 pm
I call hyperbole! Our sales tax, in most BA counties, is only 9.25%! (Sorry Alameda!)
October 15th, 2009 at 6:42 pm
Leaving the area is like an admitting you have been out-done by the competition. Only the strong stays!
October 15th, 2009 at 7:26 pm
Bay Area home sales way up!
October 15th, 2009 at 9:16 pm
Craig,
Don’t look at life like a running race where the aim is to beat everyone to the finishing line. You will be rather disappointed when you reach that finishing line, since by that time you won’t have anybody whom you could call a friend and may be you’ll realize that it was not worth it afterall.
October 15th, 2009 at 10:12 pm
My wife and I were talking around this topic last night- specifically, why the f*&k do we work so hard for so little? How can we have twice as many degrees as our parents, work twice as hard but have so little. We settled on the fact that we’re pussies. After all, my parents moved from Chicago to CA in the early 70′s because that’s what it took. In need to channel my inner Han Solo and sense of adventurism, and then lie to my children about their future prospects.
October 15th, 2009 at 10:18 pm
Really? I stay because I couldn’t sell my f@#$%*& house and move if I wanted to…
(Just kidding)
October 16th, 2009 at 7:09 am
CB,
The simple answer is that you live in the most expensive metro in the US. My parents , whom both live in the Southeast have mediocre jobs. Their combined incomes is half of what I make. Yet they own a 2 story house on 14 acres with a 2 story workshop, a heated in-ground pool, and 2 newer vehicles. The total value of their property is $180,000.
Most of my friends who stayed there also own nice homes and lead comfortable , stable lives and also don’t have super high-paying jobs.
SJ Craig,
I tend to think the smart ones are those who stash away all that lovely Bay Area money and move so they can live a lot better then they could here.
October 16th, 2009 at 9:10 am
Guys,
In my opinion the Dow is now ahead of the economy. I took profits yesterday by liquidating my 401K portfolio. Had a great run by buying indexes during the bottom when the amateurs were in panic mode. Will stay in cash now and concentrate on enjoying the holiday season.
October 16th, 2009 at 9:16 am
Bob,
Bay Area is the major league. You can achieve high rewards if you know how to play ball. Sounds like you’re losing too many games here, and want to go back to play the Little League.
October 16th, 2009 at 9:36 am
RE,
Not at all. On the contrary I’ve done well here. You already know my philosophy and plan so no need to repeat it. But the bottom line is leverage. Would you rather have more or less of it? It requires about 65-70% more leverage to attain the same things here than in most of the rest of the country. I don’t buy that its better here. I think its actually worse and the quality of life in general is not great either.
Lastly, if you’re going to go all cash then you’ve given me one more piece of evidence that indicates your lack of financial savvy.
October 16th, 2009 at 9:47 am
Bob,
There are many places in the Bay Area that are not that expensive. Prices in most parts of San Jose and East Bay are comparable to Southern California, for example. Since you’ve done well, why do you have an issue with cost?
I should clarify that I sold all most U.S. index funds, but I’m still holding my Emerging Market fund, which is up like 71% this year. That bubble won’t pop as long as your favorite country is still expanding its economy.
October 16th, 2009 at 9:58 am
Lastly, if you’re going to go all cash then you’ve given me one more piece of evidence that indicates your lack of financial savvy.
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Just ignore his chest-beating, bob. Once in a while he will come to burbed and tell stories about his portfolio liquidation and “cash position”. It seems burbed is the only outlet for his
real worldDisneyland.And when he says “enjoying the holiday season”, he only means sitting at home and talking about his portfolio liquidation on burbed.
Oh, yes I totally forgot. He travel once in a while to North Korea downtown….for business trip.
October 16th, 2009 at 10:36 am
Why RE?
Well first of all, let me ask you a few questions to help maybe clarify something. Where have you lived? I get a feeling that its probably only been in major, expensive cities. As such you’re probably conditioned like a lot of people in the area to assume that paying 450-500k for a 2 bedroom , 50 year old house is ‘normal’. As mentioned countless times, that same house in a lot of other cities is 1/4th the cost. That’s just it.
So in many ways you could compare CA to being another country where the cost of living is a lot more for what’s comparable elsewhere. I’ve beaten this to death. That’s it. But my perspective is different because I have actually lived in other places while I’m going to guess you haven’t and don’t know better.
If you’re holding an emerging market fund, then you aren’t all cash. Regardless, you’re still investing in a foolish way. You are chasing performance. The smart thing to do is get a little bit of everything. That includes big cap, small cap, mid cap, tech, energy, and of course BRIC funds, CDs and cash. The idea is that if any one area performs badly, then its likely that another will either do well or better.Sure- I’ve got emerging funds as well. But I’ve also got quite a few others.
The bottom line is that you have to diversify.
October 16th, 2009 at 11:24 am
Bob,
When I bought my index fund, that’s already got diversity built into it. However, these days buy-and-hold isn’t a sufficient strategy. If you bought and held 10 years ago, you’d be right where you started. You got to know how to time the market. I have a 5 year CD bought last year that’s paying me 5 percent right now.
October 16th, 2009 at 11:29 am
You’re grossly simplifying buy and hold. My Mother in Law, Wife, and I have all made considerable gains in the last 10 years. The reason is diversification. Had we invested in all-tech, all US, all overseas, or all this or that, then sure- we would probably be down. But that’s not the case. We’re all about double where we started. That’s typical.
You think you are outsmarting the system. But obviously you’re doing what most amateur investors do.
October 16th, 2009 at 11:34 am
Bob says,
>>So in many ways you could compare CA to being another country where the cost of living is a lot more for what’s comparable elsewhere. I’ve beaten this to death. That’s it.
CA has higher cost of living, but it also provides more opportunities than Iowa or Tennessee. If you’re in Tennessee, you won’t be able to find a programming job that pays the same salary. Therefore, to a person who has lived in Tennessee their own whole life, the cost of living won’t seem that low. You’re blinded by the benefits of the place you live in and only see its flaws, because you’re taking the benefits for granted. If you had stayed back in Tennessee, you would likely be admiring the California weather and lifestyle.
October 16th, 2009 at 11:39 am
You’re not catching my drift RE. Its not just a simple comparison of one area with a lower cost of living versus a higher one. Its what I mentioned earlier- leverage.
Good example: The typical California teacher cannot afford to buy a home in this state. The teacher in TN with the same job, even making a lot less, can. Perhaps there are more tech jobs in Cali, but it doesn’t matter if making 200-250k would barely afford a starter home here. I call it re-classification of the class system. What is typically lower middle class elsewhere is the spot the typical tech-working couple is in the Bay Area because again- they have less leverage.
If anything, living here has given me a lot of appreciation for how things are elsewhere. People back home really don’t have the problems Cali has. Nobody moans and complains about the cost of housing. Most everyone can easily afford, regardless of their job.
October 16th, 2009 at 11:39 am
Bob,
Diversification ensures that your gains will be average, because there’s always something pulling down your portfolio.
I don’t believe in staying in the market all the time. There are too many smart people in the market who will take my money. It’s like if you gamble a lot in Vegas, you’re guaranteed to lose.
October 16th, 2009 at 11:48 am
RE,
Look at the math. Its all about compounded percentages. Stocks return a median avg of 7% annually over time. that 7% year after year compounds, doubles, triples, and quadruples and so on the longer it sits. That eventually adds up to huge gains. Simple mathematics really. Any economist will say the same thing.
But you’re welcome to do as you please. But I don’t agree with your investment philosophy.
October 16th, 2009 at 11:57 am
RE,
Look at the math.
ROTFL
October 16th, 2009 at 12:10 pm
No need to liquidate, although it’s not a terrible idea, the market is way too high. Just put money into a more defensive or international stock with a solid dividend yield. Or in oil. Phillip Morris yields 5% and earns all income overseas (meaning crashing dollar is good). Corporate debt can yield 10% (check out ticker PTY). BP yields 6%. The need for oil isn’t going away anytime soon. But I agree, I don’t think the market as a whole is going to perform well in the future. Still, there are a lot of good places to put retirement money.
And BTW, the smart bay area residents are the ones that are saving their money to go buy in a place with a better quality of life. Why work 80 hours a week to buy in an area most would consider a hole. Yes, I’m talking about most areas of SJ, Santa Clara, Sunnyvale, Milpitas, etc. There are decent and even nice areas in the bay area, but they sure aren’t worth what they sell for. Not when you can live in similar places elsewhere for half the price.
October 16th, 2009 at 12:18 pm
You notice Pralay made several nonsense points, but he doesn’t dare to say I was wrong.
October 16th, 2009 at 12:25 pm
Bob,
Let’s use the Tennessee example. I agree it’s a good place to live if you’re a teacher. However, there’s no upside to the area. You can’t be more than a teacher, because there are very few 6 figure high tech jobs there.
October 16th, 2009 at 12:39 pm
You notice Pralay made several nonsense points, but he doesn’t dare to say I was wrong.
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RealEstater, it’s too obvious and I don’t need to show that you are wrong. You are wrong 99% of the time. In addition, you lie in too many occasions.
October 16th, 2009 at 12:44 pm
RE, there are a lot of good, high-paying jobs in this county not in high tech. If you happen to be in tech, I can understand the need to be here. However, for those not in tech, why stay when you can probably do the same thing elsewhere and have a much better quality of life.
October 16th, 2009 at 12:45 pm
oops, “county” should say “country.”
October 16th, 2009 at 12:48 pm
When you buy real estate, you’re not just paying for the structure. You’re also buying the attributes of the area, such as employment opportunities, weather, demographics, etc. All you guys are saying is that you can buy a better structure elsewhere, which I don’t disagree with.
October 16th, 2009 at 1:03 pm
why stay when you can probably do the same thing elsewhere and have a much better quality of life.
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R,
You are silly. Quality of life does not qualify as attribute of an area. Rather it is just a part of structure of house. Only attributes of an area are employment opportunities, weather, demographics.
October 16th, 2009 at 1:09 pm
I did some calculations recently, and I figured out that California home prices have gone up (after inflation) 8% over the past 30 years. Not 8% annually – 8% total. If you cover your buyer’s closing costs and pay the 6% commission at the end, you’ve already lost all of that, and that’s before even factoring in the cost of upkeep.
Naturally, many parts of the Bay Area have outpaced this by a huge margin over the past 30 years. But that’s what happens when, like Palo Alto, you go from a cow town to a major multinational economic engine. That kind of sea change won’t happen again.
October 16th, 2009 at 1:23 pm
But that’s what happens when, like Palo Alto, you go from a cow town to a major multinational economic engine. That kind of sea change won’t happen again.
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But our local expert RealEstater said that past performance is guaranteed for future. Hence home price will continue to double in every ten years.
October 16th, 2009 at 1:27 pm
Ah, RealEstater finally features in San Francisco Chronicle.
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Damn, apart from being bully, do you really think he is a boss? Unless of course you are talking about being boss of his own kids.
October 16th, 2009 at 2:00 pm
RE,
The problem with your use of the term ” opportunity” is that it generally means that it- being the opportunity- is meant to place the person taking it gives them a competitive and financial advantage. If that were the case, then everyone working at such jobs would not only easily be able to afford a reasonable home, but also have considerably better living conditions and do so with a higher degree of buying power. That isn’t the case in the Bay Area. If the jobs don’t pay enough to acquire what can be had elsewhere for a lot less for either the same exact or an entirely different job, then there is no opportunity. There are just more jobs and more people, and that doesn’t create opportunity. It does bring competition, and that’s one of the reasons it costs so much here.
October 16th, 2009 at 2:54 pm
Bob,
Opportunity is not equivalent to success. This is the case everywhere. Every one of my neighbors have captured the opportunity, and are able to own a piece of the area.
Home prices are set by the market. If home prices are truly unaffordable, then prices would adjust. This has happened in some parts of the Bay Area (yet Pralay and you are still not buying). There is really nothing to debate here. It’s a free market economy.
October 16th, 2009 at 3:07 pm
If home prices are truly unaffordable, then prices would adjust.
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I agree 100%, RealEstater.
No wonder RBA is shrinking.
October 16th, 2009 at 4:02 pm
RE,
You’re confusing affordability with desperately clawing at whatever they can get. Prices in the Bay Area require buyers to put up an enormous proportion of their income for the mortgage. The avg. Bay Area homeowner spends almost 50% of their incomes on paying for the house.
That compared to other parts of the country where its more like 30%. BIG difference. Success is also highly subjective. Success to me means economic stability, and assured retirement, and limited financial liability. Put frankly, opportunity is not in the Bay Area. The fastest growing areas of the country are all in the Southeast. Why? Because they are the new area of opportunity. They offer what the Bay Area and most of the East Coast can’t.
October 16th, 2009 at 4:56 pm
bob, in a competitive environment, opportunities abound but they have to be sought or created. They’re not simply “offered”. Attend a few meetups with local entrepreneurs and you’ll find out just how wrong you are about lack of local opportunities. I also find there are lots of support for entrepreneurship in the bay area.
As for your 50% figure for the average homeowner, it sounds way off. Did you mean the typical homebuyer
And another area where your formulation is wrong: prices are not requiring buyers to spend 50% of their salary to service a mortgage. The $2M house buyer could settle for a $1M. The $800k buyer could settle for a $400k house. But they sometimes don’t and go for the pricier location, and it’s their choice. They’re not forced to pay through their nose, they just have a different opinion of how they should spend their money.
October 16th, 2009 at 5:34 pm
Bob,
In the higher priced RBA, you’re actually less likely to find people who pay 50% of their income for housing. This is far more likely in the lower end neighborhoods. When the economic crisis hit, the lower end areas had the most foreclosures. You don’t see many distressed sellers in places like Palo Alto or Los Altos. It’s somewhat non-intuitive, but the higher priced areas are the most stable.
Looking at myself as an example, less than 20% of my family income goes toward housing. I spend at least as much on my kids (I’m sure many parents can relate to that). If you don’t have kids, it shouldn’t be that hard to live here.
October 16th, 2009 at 6:20 pm
The fact that the Bay Area has the highest concentration of Alt-A type loans- the majority of which were used in prime areas- indicates that a significant portion of the Bay Area residents spend exorbitant amounts of their incomes on housing. Of all the people I personally know who have bought houses in the last 5-6 years, ALL of them had to go to some extreme measure to get it, whether they bought it with several family members pooling money, using sometimes 2 and 3 different loans, putting down a huge down payment, and so on. Some of these people make well over 6 figures.
DreamT, I don’t doubt there are tons and tons of entrepreneurs here. Virtually every kid out of college thinks they’re the next genius with their little iPhone app. VC money also enables a lot of sometimes really bad ideas to get wings that shouldn’t have seen the light of day. Then you have the occasional Google, Apple, or some minor startup. There’s also people genuinely making heapin’ loads of money along with some really gifted, smart people.
Indeed there are professional opportunities here. If your goal is to become the world’s next great tech guru, then this is probably one of the best places. If you want to work for a large tech company, again- this is probably the best place to do it.
The problem is that there are many hundreds of thousands, or even millions of people just like you and RE, who all come here because they think success can’t be had anywhere else, correct me if I am wrong. With that, they are all trying their damnedest to beat you to it. They will buy up the houses, get to the best schools so their kids can later go to the best colleges, and so on, and so on. Its infective. A sort of addictive lifestyle to try and be the best, to strive and win, to get ahead, and to be a success.
Perhaps on some level I can respect that. Nothing wrong with it. Without people like that, we wouldn’t be the country we are. But on the other hand, what if you could live like you live now, only that what it took to have what you have cost only half of what it does now? What if your kids could go to a decent school without having to pay more to do it? What if doing so meant that perhaps there were less glamorous jobs, or maybe even less exciting jobs, but jobs that more than paid your living expenses and gave you a level of security?
I guess what I’m saying is that yes- I’ve had a high level of drive and determination for years. It has served me well. I have saved up enough to do well elsewhere, and when I get there, I will be happy to consider other career paths- perhaps ones that are more laid back and less demanding of my time. My years in the Bay Area has enabled that. That to will be my success story. Its not the same for everyone.
October 16th, 2009 at 7:00 pm
bob – the majority of entrepreneurs I meet have had professional carriers and now run their own business. They are looking for a sustainable lifestyle, not explosive growth. None of them are fresh out of college, maybe because we don’t go to the same meetups. You probably won’t hear about them on the media because they’re the norm, and the media loves to focus on the exceptional.
With respect to your other comment: “who all come here because they think success can’t be had anywhere else.”
I suspect the large majority of people came here because they found a job here, not because they had a narrow world vision of success. Or like me, they came because their spouse’s family were local residents. If my wife’s family lived I North Carolina, that’s where I would be right now. I probably wouldn’t be happier or less happy, but I know there would be less opportunities in my line of work.
And finally, I will disappoint you again with my response to: “What if doing so meant that perhaps there were less glamorous jobs, or maybe even less exciting jobs, but jobs that more than paid your living expenses and gave you a level of security?”
That’s good enough for me at the moment: having earned much more for a while, I don’t feel I’m missing out on happiness at the moment 
At my age (not mid-30s yet), I would much rather love what I’m doing on my own terms, have great freedom to learn, than live in much greater financial security doing something tedious and feeling like I am getting paid to waste my years away. There’ll always be time for that later.
That said, I feel I have good job security and can pay my living expenses and more, even on a shoestring salary
October 16th, 2009 at 7:16 pm
That said, I feel I have good job security and can pay my living expenses and more, even on a shoestring salary
That’s good enough for me at the moment
Now that’s just un-American! oh, wait…
October 16th, 2009 at 7:42 pm
the majority of entrepreneurs I meet have had professional carriers
Really? Is that like Southwest or US Air?
October 16th, 2009 at 7:46 pm
>>The fact that the Bay Area has the highest concentration of Alt-A type loans- the majority of which were used in prime areas- indicates that a significant portion of the Bay Area residents spend exorbitant amounts of their incomes on housing.
Let me correct you on your “fact”. Alt-A is not an issue in the RBA. It’s only an issue in outlying areas.
October 16th, 2009 at 7:51 pm
I’ve typed “carrier” once too many times today
October 16th, 2009 at 7:56 pm
bob writes: The fact that the Bay Area has the highest concentration of Alt-A type loans- the majority of which were used in prime areas- indicates that a significant portion of the Bay Area residents spend exorbitant amounts of their incomes on housing.
I may have selective memory, but I don’t recall every seeing a statistic that breaks this out by zip code or neighborhood. For kicks, does anyone the 94301 Alt-A data? I haven’t been looking very closely as I greatly prefer central and west Menlo Park and, even more so, Portola Valley to PA, but I don’t recall seeing a single 94301 short sale or foreclosure. Now that the Alt-A mortgage crisis is cresting and the prime crises is beginning, you would think that there would have been more damage if the above conclusion is correct.
October 16th, 2009 at 10:27 pm
Really? Is that like Southwest or US Air?
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Wow! RealEstater found a spelling mistake today. That’s a big improvement from his ignant and “exercept” days.
October 16th, 2009 at 11:13 pm
I find it both amusing and horrifying that people’s retirements are in 401Ks rather than pensions.
Most people either put all their money in their company’s stock, or all in very diversified index funds.
It’s rather unfortunate that everyone has to be a day trader to just live.
I’m not sure what the solution is.
October 17th, 2009 at 12:34 am
“What if doing so meant that perhaps there were less glamorous jobs, or maybe even less exciting jobs, but jobs that more than paid your living expenses and gave you a level of security?””
Bob, that sounds nearly as bad as working the debt treadmill here in the bay.
October 19th, 2009 at 8:24 am
One thing to remember about Alt-A in the RBA is that it may not be as bad as it looks, because stated income loans were used for move-ups. Here’s how:
1. person owns a house with equity in it, and wants to move up. Selling the house first is a PITA. Also in 2005-2007, it was harder to find a house than to sell. So if you sell first, you could find yourself without a place to live after the sale closes and/or rent-back period ends. Obviously not truly homeless, but would have to move to an apartment for some time, another PITA.
2. Desired plan is to buy the move-up, then sell the starter home. But, combined PITI on 2 houses is more than the desired income percentage.
3. Solution – use a stated income loan to buy house #2. In the short term, you are paying two PITIs, but that’s not the ultimate plan, and after selling house #1 then the PITI is not out of whack.
I considered this plan but did not need to do it. But, had I done so, I would have an Alt-A with a normal PITI % of income.
Also, one might use a stated-income loan if annual income is wildly variable, say due to stock grants or bonuses or sales commissions that change year to year. I’d have to think that people with that kind of income pattern are more likely to live in RBA. Sure, they may have trouble this year as bonuses will likely be down, but if the econonomy doesn’t collapse it can work out ok.
For sure there’s many people who used a stated income to buy a house that they could not afford. And there’s probably some people who tried to do the above plan in 2008 then failed to sell.
I have no way to know what %age of Alt-A loans fall into these “OK” categories unfortunately. And teasing that out per zip code would be a feat.
October 19th, 2009 at 8:40 am
DreamT,
I suppose I didn’t phrase that well enough. What I’m getting at is that what if you had managed to save enough in order to relocate elsewhere, buy your house, not have many living expenses, and only have a job merely to pay the utilities while the majority of what you did was on your own terms, with your family, with less time being spent at the office? Perhaps some people want their lives to revolve around work. Not I. That’s basically what it boils down to. My personal opinions are different than yours. I don’t exactly respect entrepreneurs the same as you do. I’ve met way too many whom their work takes on a higher meaning than their own families. If success means that, then that isn’t success at all.
October 19th, 2009 at 8:52 am
Also, one might use a stated-income loan if annual income is wildly variable, say due to stock grants or bonuses or sales commissions that change year to year.
I have a hard time buying that whole post. At least for any significant number of buyers. During the credit boom, the “wildly variable” income didn’t matter for people with good credit. I don’t remember for sure if I was required to provide more than one year’s 1099 when I bought in ’05 but I can definitely tell you they were very loose with the lending. We qualified for a second house without selling the first (but we did sell it to get the mortgage down to an affordable level).
While your scenario is quite feasible in theory, the big question is how many people were responsible enough to use those tools wisely? In my case, I had enough equity to easily refinance last summer – I wonder if there’s a way to determine how many of the Alt-A (or I/O) loans taken out during the peak years are STILL active? Seems anyone savvy enough to follow your scenario would have re-fi’d long ago to get rid of the higher interest rates.
October 19th, 2009 at 10:08 am
bob, I completely agree with you that if family takes a backseat, professional success might well be personal failure. But I disagree that you need to “move elsewhere” to reach this balance – very much so. I’d be happy to expand on this off-thread.
October 19th, 2009 at 10:34 am
In Bob’s case, family has already taken a backseat to saving money (no child is planned due to cost).
October 19th, 2009 at 10:47 am
How do you keep outdoing yourself with idiotic statements, RE? Or is that just troll-bait? You can’t really believe bob isn’t having kids because they’re too expensive, do you?
October 19th, 2009 at 11:05 am
How do you keep outdoing yourself with idiotic statements, RE?
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I would not make such a negative statement about him. RealEstater is like wine. The older he gets,
bettermore idiotic statement he makes.October 19th, 2009 at 11:09 am
hey, I edited my remark so I don’t call him an idiot. Just his statement.
October 19th, 2009 at 11:40 am
“The older he gets, better more idiotic statement he makes.”
Better is more idiotic. I find his idiocy quite entertaining.
October 19th, 2009 at 4:37 pm
Nomadic wrote:
“I wonder if there’s a way to determine how many of the Alt-A (or I/O) loans taken out during the peak years are STILL active? Seems anyone savvy enough to follow your scenario would have re-fi’d long ago to get rid of the higher interest rates.”
An excellent question, particularly since rates have declined since the boom. That would be great data indeed – what %age of active loans in RBA are currently Alt-A. Sadly I don’t know how to find that data.
October 19th, 2009 at 5:30 pm
Me either, but the maps here:
http://www.newyorkfed.org/mortgagemaps/
indicate it isn’t as rosy as you think. You’ll have to click the “Alt-A” radio button to get a relative idea of the prevalence of those loans. Unfortunately the data is from May, so it’s a bit stale.
October 19th, 2009 at 5:38 pm
One more thing from the site: of the Alt-A loans statewide, 82.7% are low or no doc, 11.3% are in foreclosure and only 4.7% reset in the next 12 months.
In August, this doom & gloomer said that our area had 35,000 active Alt-A loans (versus 400,000 in SoCal). Plus another 180,000 or so in the SF MSA (9 counties).
http://www.doctorhousingbubble.com/wp-content/uploads/2009/08/alt-a-loans-california.png
(full article:
http://www.doctorhousingbubble.com/alt-a-option-arm-and-subprime-loans-will-turn-california-into-a-zombie-mortgage-state-28-percent-of-alt-a-loans-in-california-60-days-late-alt-a-mortgages-by-california-region-11-million-alt/ )
October 19th, 2009 at 5:41 pm
oops – that should’ve been 80,000 above. but he says the total in the Bay Area (incl. SC County) is 90,000 so that’s even better.