$335,000 instant equity waiting for you in Redwood City house
$249,900
Beds: 2 Baths: 1 Sq. Ft.: 930 $/Sq. Ft.: $269 Lot Size: 3,306 Sq. Ft. Property Type: Detached Single Family Style: Ranch Stories: 1 View: Neighborhood Year Built: 1918 Community: Central Park County: San Mateo MLS#: 81005399 Source: MLSListings Status: Active On Redfin: 23 days
Thanks to Burbed reader Nate for this find!
Here’s what Nate had to say:
While many parts of the Peninsula RE market remain near their highs, it looks like the market for 90+ year old shacks on tiny lots in Redwood City is more than 50% off the prices paid during the bubble.
Let’s take a look!
Hello instant equity!
It’s clear to me that Redwood City has reached the absolute bottom. At $269 per square foot, this can’t get any lower. I mean heck, this is practically being given away. Now sure it needs some repairs… but hey its cozy! Cozy! Can you say that about any other 930 sqft house?
It’s only a matter of time before this returns to its $629 per square foot glory. Maybe it’s waiting for you! Some pergo, some granite, some steel – BOOM! This house will take off!
What are you waiting for?
March 12th, 2010 at 8:36 am
Funny that the Redfin history doesn’t show the price when the bank took it over.
Ah, the owner died a year after purchase. The heirs put it on the market in September ’07 and chased the market downward before losing it altogether. GMAC foreclosed 6/09 for $316,800.
March 12th, 2010 at 9:00 am
I wonder if it was the purchase of this property that led to owner’s death.
March 12th, 2010 at 9:23 am
It must need a lot of repairs. There’s no way this house is worth this little.
March 12th, 2010 at 10:42 am
you’re kidding sonar? 1/4 mil for trash and you’re looking at it thinking “this little?” Me thinks you’ve been in the bay for a trifle too long…
March 12th, 2010 at 12:31 pm
guys, someone pls help me with perspective from past.
as i learn more about mortgage and front-end ratio, it seems really bad to buy a house at current prices.
If you have a (RBA) house for sale for 800k and assume 45% front-end ratio and 6% rate, that basically means buyer would have to have more than 125k annual income.
Is it true that they don’t consider stock money/option bonus etc for debt ratio since those incomes are not predictable?
if yes, 125k will put most of the single-earning families out of this market. doesnt it mean doomsday is nigh the moment rates increase a tiny bit?
how did work so far? did people earn much more than 125k? do we have plenty of double-earners (looking for a 800k house)? do people put more than 20% down? was 45% rule not applicable in past?
March 12th, 2010 at 12:56 pm
sv_newbie, what happened was an enormous amount of fraud on the part of borrowers, and lenders. Borrowers would lie about incomes, lenders wouldn’t check it since they just resold the loans, and as housing got more expensive. Creative financing, like option loans, came into existence to keep the whole cycle thing going. I think you’re starting to see the “aha!” moment that some of us housing bears had. There are a lot of people who made a killing during the upswing of the housing bubble, and they’re sitting on a lot of money with the mentality that housing has to rebound, so when they see a house that’s cheap by bubble standards, they snap it up. Man, I’m kicking myself over sitting out the upswing of the bubble from 2001-2006. I could have flipped a couple of houses and made a few hundred grand.
I personally want to buy a house, and I can afford it, but I think it would be a waste of my money to do so in the current housing climate.
March 12th, 2010 at 2:46 pm
Base income isn’t much more predictable than bonuses.
An $800k house typically only requires a comfumbo mortgage below $729k. $125k base salary is typical of mid-level engineer, single earner. Typical house buyers bring money down, extra savings and are multiple earners. At this price range and below, yes many winning bids bring more than 20% down at this time. Finally the 45% would be for a cheaper house: you’d want to keep it to below that ratio for a much smaller income, and you can go beyond that ratio for a higher income, simply because routine expenses (insurance, gas, groceries, utilities, car payment, daycare, etc.) don’t correlate much with the amount of your mortgage and you can keep most expenses fixed even as you double your mortgage.
March 12th, 2010 at 2:59 pm
DreamT, 45% is the limit on FNM/FRE loans. So, if someone is drawing mortgage then they need to honor that.
So, that gets me thinking – how many houses are there “worth” more than 800k in SC county? how many households earn more than 125k? which one is larger number?
I guess between 750-1.5M range almost everyone takes mortgage. And, it’s insane to put more than 20 down. So, as rates increase prices WOULD HAVE TO COME DOWN.
if people don’t qualify, prices will come down no matter what the fundamentals appear to be.
March 12th, 2010 at 3:04 pm
mtv-renter, thanks for your note.
lets say that between now and 2012 salaries increase by 10% in valley for hi-tech workers. that assumption is certainly not too pessimistic, to say the least.
that means if rates increase by more than 0.5%, there are fewer people qualifying for these houses.
Question is: Is there any chance in hell prices can increase if there is no creative financing? forget rent/price ratio, tax refund blah blah, if govt keeps 45% ratio (which it can only decrease since the focus is on frugality) and lenders check only basic income, housing is done for.
March 12th, 2010 at 3:15 pm
> DreamT, 45% is the limit on FNM/FRE loans
How relevant is this limit for an $800k purchase?
> So, that gets me thinking – how many houses are there “worth” more than 800k in SC county? how many households earn more than 125k? which one is larger number?
Uh? By looking at house worth instead of outstanding mortgage, you’re presuming that nobody has any equity in their house. And by looking at household income, you’re disregarding both additional obligations (second house, three cars, whatnot) as well as additional sources of income (stocks, etc.).
Most importantly, what sustains house prices are what purchases can afford, not what current homeowners can afford.
That said, if rates increase, house prices will be negatively affected. As for creative financing such as option ARMs, didn’t that all stop three-four years ago already?
March 12th, 2010 at 3:20 pm
I think the only way prices will increase anytime soon is due to devaluation of the dollar, which is certainly possible. The future is completely uncertain because it’s so dependent on the policies of the Federal Reserve. If the Fed did the right thing, we would have a period of strong deflation and house prices wold decrease in real terms then after a time we would return to economic growth. Right now, we have an inflation driven zombie economy, like Japan’s, with printed money raising the prices (in dollars) of certain assets. Still, housing if flat while the market goes up, so given the devaluation of the dollar, housing is still getting cheaper in real terms. Prices going up in dollars and dropping in real terms is certainly possible, that’s called stagflation and we have a good many years of that ahead of us given government policy.
I think you’re being optimistic with your hi-tech income raise. The tech sector is losing jobs, like any other, and tech workers aren’t the only ones who were driving up CA’s housing prices. Inflation adjusted, housing can only go down. As for how much inflation we have, that’s up to the stupid, evil cretins in Washington.
March 12th, 2010 at 4:02 pm
I guess between 750-1.5M range almost everyone takes mortgage. And, it’s insane to put more than 20 down.
Why insane to put more than 20% down? How do you suppose a two engineer family earning $250k jointly affords a $1.5M house? Are you saying people don’t use trade-up equity if it exceeds 20% of the new down payment?
March 12th, 2010 at 4:05 pm
Okay, bad example numbers. I didn’t do the math until after posting. Still, the point is that people put more than 20% down to keep the monthly payment more reasonable.
March 12th, 2010 at 4:24 pm
I think he means in this environment, it is a bad idea. Which, it is. Right now you’d be crazy to put down more than the minimum so that you would leave open the option to walk if you decide to do so.
March 12th, 2010 at 4:34 pm
oh anon, you’re echoing one of RealEstater’s main arguments for purchasing a house: maximizing leverage. You found a kindred spirit!
March 12th, 2010 at 4:39 pm
nomadic, yes i mean in current environment.
if you are going to put more than 20%, it’s much better to wait for rates to increase so you have less competition and then buy.
also, anon’s point is valid – pay as little as possible and walk away if things go south
March 12th, 2010 at 4:59 pm
Even using my numbers, that still translates to about $7500/month at 5% interest and including taxes. That looks insane with “only” $250k income.
Insane without even factoring in comparable rents.
March 12th, 2010 at 5:10 pm
nomadic, is that your final figure for an $800k purchase with 20% down at 5% interest rate?
I mean, $8,888 / month sounds better and is just as accurate.
March 12th, 2010 at 5:14 pm
No. Try to keep up, DreamT!
I was referring to my “bad” $1.5M number and the family with the $250k income.
(I said using my numbers meaning what I wrote in #12.)
March 12th, 2010 at 5:43 pm
I’m sure #5 appreciates your soliloquy
Frankly it doesn’t make sense to me why a young family of two engineers earning $250k combined in base salary with just enough savings for a 20% downpayment would purchase a $1.5M.
But somehow I doubt that this is the typical $1.5M house buyer these days.
March 12th, 2010 at 7:21 pm
So, you guys are saying that people used to put 30-40% down in RBA (today priced 7-800k+ market?)?
that’s how they qualified for loans etc.
March 12th, 2010 at 7:37 pm
No, that’s not what we were saying (although it would be true for some folks). First, I’d argue that $800k doesn’t get you RBA. Maybe “real gray area,” right DreamT? lol.
During the bubble, people were buying $800k houses with as little as zero down, maybe 5%. Lenders would accept W-2s for income, so if bonuses were good, then they would be counted to qualify. Some unscrupulous borrowers and lenders would just outright lie. Then there’s also the case of the interest-only and neg-am loans. That makes the payment smaller up front. The idea was to “grow into” a full payment in five years or so, or to refi as needed to keep ahead of the payments.
People in the RBA did the same stuff, but since they tend to have more money, they are generally (as a group) more financially savvy. Therefore, the numbers of people getting themselves in over their head is proportionally less.
I agree with you and DreamT that
ifwhen interest rates go up, it will put downward pressure on prices.March 12th, 2010 at 7:38 pm
$800k is not RBA, that’s where I live and everybody here will tell you it’s only grey area
Yes typically someone buying into Los Altos would sell a house elsewhere (ex: Mountain View after 5 or 10 years) and could easily bring 50% down with just equity.
March 12th, 2010 at 7:43 pm
Right. Grey if you prefer British spelling for your colours.
March 12th, 2010 at 7:55 pm
lol nomadic, thanks for the thought in #22:P
I was offered up to $1M with option ARM financing (and declined, I’m not stupid). I wouldn’t say most RBA purchases were with 0% or 5% down. I would say it covered the entire spectrum 0% to 100% down. Five years back.
March 12th, 2010 at 7:56 pm
#24 – I still get told daily that “canceled” is a spelling error
March 12th, 2010 at 8:00 pm
$800K
10% downpayment
$720K mortgage
30-year fixed at 5%
$3,865 monthly mortgage payment
45% ratio
$8,589 monthly income
$103,069 yearly income
Put 20% down and you only need to make $91,617 a year.
Quite easy to make that salary today so start considering future raises and understand why so many people buy even at today’s prices…
March 12th, 2010 at 8:01 pm
Huh, dems people is ignant.
I agree that “most” RBA purchases weren’t under 10% down, even during the bubble days.
March 12th, 2010 at 8:19 pm
> I still get told daily that “canceled” is a spelling error.
What can you possibly cancel every single day?
March 12th, 2010 at 8:24 pm
wireless services, if you want to know
March 12th, 2010 at 9:38 pm
Grey if you prefer British spelling for your colours.
—-
Or humour. Is balony British too? May be it’s North Korean.
March 12th, 2010 at 9:46 pm
Good news. Remember “all clear for take-off”? Not sure about we, but someone’s saucy business is definitely taking off – right here in RBA.
March 12th, 2010 at 9:51 pm
I got a mortgage in 2009. the lender looked at the 2008 and 2007 W2, including bonus & options. So one year ago they did look at these, but averaged over two years. I don’t know if that’s changed since then.
I would have to believe that most buyers of $1.5m houses are trading up. So there can be equity, particularly if the original house was purchased in the 90s. So a $1.5m house does not mean $1.2m mortgage.
Is it insanity to put more than 20% down? Is it insanity to buy a house that’s more than the bare minimum? not if you can afford it and it’s something that you value. But of course not everyone values this in the same way.
March 12th, 2010 at 9:51 pm
Gee Pralay, now you’ll accuse me of being RealEstater
by Jove.
March 12th, 2010 at 10:34 pm
Between 1996-2006, Americans used over $2 trillion in home equity to pay for home improvements, cars, medical bills, etc., largely because real income had been stagnant since the early 1990s. Economic recovery requires that we repay the remainder of these amounts, overcome stock market losses (10% between 2000-2009), the loss of some 10 million jobs, and reductions in credit card balances, and find an equivalent amount to the former home-equity sourced financing ($975 billion in 2006 alone – about 7% of GDP) to finance another consumer-driven GDP upturn – without the prior boom in housing and commercial building. Great Depression coincided with the decline of U.S. agriculture (crop prices were falling before the 1929 crash), and economic growth resumed only after the New Deal and WWII. Similarly, today’s recovery from the Great Recession is also hampered by the concomitant shift from manufacturing to services, continued automation and globalization, taxes that have become less progressive (shifting money from those who would spend to those who haven’t), and new accounting regulations that discourage mortgage renegotiation.
March 12th, 2010 at 10:35 pm
U.S. finance industry – its size (41% of corporate profits in 2007), avarice (maximizing revenues through repeated high fees generated by over-eager and over-sold homeowners needing to refinance adjustable-rate mortgages that repeatedly reset), and ‘sophisticated ignorance’ (using complex computer models to evaluate risk that failed to account for high correlation within and between housing markets; ‘eliminating risk’ through buying credit default swaps from AIG – blind to the likelihood AIG could not make good in a housing downturn), and excessive risk (banks leveraged up to 40:1 with increasingly risky mortgage assets – ‘liar’s loans,’ 2nd mortgages, ARMs, no-down-payments; taking advantage of the ‘too-big-to-fail’ and ‘Greenspan/Bernanke put’ phenomena). Much of this behavior was driven by lopsided personal financial incentives (bonuses) – if bankers win, they walk off with the proceeds, and if they lose, taxpayers pick up the tab. However, to be fair, any firm that failed to take advantage of every opportunity to boost its earnings and stock price faced the threat of a hostile takeover.
March 12th, 2010 at 10:36 pm
The impact of mortgage defaults is greater than one would otherwise expect because financial wizards found that the highest tranches of securitized mortgages would still earn a AAA rating if some income was provided to the lowest tranches in the ‘highly unlikely’ event of eg. a 50% overall default, thus boosting the ratings and saleability of lower tranches. (Fortunately for the U.S., many of these mortgages ended up overseas, spreading the disaster.) Another problem is that mortgage speculators make more profit from foreclosure than partial settlements. Meanwhile, investors worried that mortgage servicers might be too soft on borrowers required restrictions that make renegotiation more difficult and lead to more foreclosures. Similarly, those with 2nd-mortgages often found that those holding the second were unwilling to accept a principal write-down as their share of assets would be wiped out. Finally, new government regulations aimed at making banks seem healthier than otherwise allowed changing from ‘mark-to-market’ valuation of mortgages to long-term ‘mark-to-hope’ valuation – thus, writing down assets in a renegotiation would generate the very mortgage write-downs the new regulations avoided, and thus increased bank reluctance to do so.
March 12th, 2010 at 10:37 pm
BEIJING — China accused the United States of destabilizing the world economy and meddling in other countries’ affairs Friday — its standard response to Washington’s annual review of Beijing’s human rights record.
The U.S. State Department report issued Thursday accused Beijing of abusing its citizens’ rights and maintaining currency policies that cost millions of U.S. jobs.
In response, China’s State Council, or Cabinet, accused Washington of using human rights as a “political instrument” to defame other countries and took aim at the United States’ contribution in fomenting the global financial crisis.
“At a time when the world is suffering a serious human rights disaster caused by the U.S. subprime crisis-induced global financial crisis, the U.S. government still ignores its own serious human rights problems but revels in accusing other countries. It is really a pity,” said a report issued by the council’s information office.
March 12th, 2010 at 10:38 pm
GREAT RESPONSE FROM CHINA:
“At a time when the world is suffering a serious human rights disaster caused by the U.S. subprime crisis-induced global financial crisis, the U.S. government still ignores its own serious human rights problems but revels in accusing other countries. It is really a pity,”
March 12th, 2010 at 10:45 pm
TLDR
March 12th, 2010 at 10:58 pm
AIG, once bailed out, paid off billions to Goldman Sachs at 100% (Secretary Paulson’s former firm), while defunct credit-default-swaps elsewhere were settled at only 13 cents on the dollar, says Stiglitz. Overall, he is very negative on the financial-sector bailout (TARP), believing that the money would much better have been used to capitalize new banks at 12:1 leverage, or not spent at all. The resulting bank subsidies were unfair to taxpayers (Treasury put up most of the money and got short-changed on potential benefits), and implementation was inconsistent – some institutions and stockholders were bailed out, others were not. (The reason lending ‘froze up’ is that banks didn’t know whether they or their peers ere underwater.) The stimulus package, on the other hand, was too small (aimed at 3.6 million jobs, vs. 10 million lost plus 1.5 million new workers/year needing jobs), and was delegated to Congress without clear guidance. The result was a failure to provide mortgage insurance for those losing jobs, while instead creating the ‘cash-for-clunkers’ (mostly just moved sales from one period to another – [...] estimated only 18% were added sales, costing taxpayers $24,000 apiece; eight of the top ten purchases came from Asian manufacturers), ineffectual tax cuts, putting money into a failing auto industry, and increased road construction (greater global warming) instead of giving even more money to high-speed rail. The stimulus emphasis should have been on fast implementation, high-multiplier impact, and addressing long-term problems (eg. global warming). The employment situation now is worse than just the unemployment rate suggests – there are a record 6 applicants for every opening, the average work week is at 34 hours – the lowest since data was first collected in 1964, many have turned to disability instead of unemployment and are not counted.
March 12th, 2010 at 11:09 pm
Dude, just post links to your articles if you want to rant. At least give credit where it’s due…
March 12th, 2010 at 11:26 pm
Freefall: America, Free Markets, and the Sinking of the World Economy
March 12th, 2010 at 11:26 pm
2019: U.S. National Debt Will Reach 70% Of GDP
March 13th, 2010 at 12:57 pm
nomadic Says @ March 12th, 2010 at 11:09 pm
Loyd Eskildson is retired from a life of computer programming, teaching economics and finance, education and health care administration, and cross-country truck driving. He’s now a reviewer at Basil & Spice.
http://www.basilandspice.com/financial-well-being/category/loyd-e-eskildson
March 13th, 2010 at 1:40 pm
Misleading-sounding link, ss. The guy sounds like a food critic, but the link leads to an interesting review of a book that compares American schools to those in China and Japan. Excellent example of how just throwing more money at them doesn’t raise performance.
March 14th, 2010 at 2:44 pm
re the house – the neighborhood doesn’t look all that terrible. probably livable.
as an aside, go to Street View and stroll down to 1158 Davis Street (same side of the street) to see some truly special landscaping. the strangest plant-based landscaping I’ve ever seen.
anyone can create bizarre landscaping using e.g. statuary. this, however, is going to stick in my head.
March 14th, 2010 at 3:23 pm
Orgahnic Cawlums, tuno. Complete with a spare tire and pole. The metal pole is the special (and more valuable) cawlum.
March 14th, 2010 at 5:50 pm
Sweet! It’s like a shrub army!
March 15th, 2010 at 5:51 pm
$800K
10% downpayment
$720K mortgage
30-year fixed at 5%
$3,865 monthly mortgage payment
45% ratio
$8,589 monthly income
$103,069 yearly income
course’ you’re also forgetting rather important things like property taxes, repairs and so on. Realistically you’re looking more at $5,000 a month. Bare minimum you should be making more like $150,000. That’s in my opinion just scraping by if you care to have a retirement worth anything.
If anything buying a house today in the Bay Area- where the prices are still at artificially elevated levels due to government meddling- is probably more risky than it was in the boom. Tech is shedding jobs like mad these days and if you can get into a tech company, good luck getting anything resembling full time. Getting a full time employee gig and not a contractor job is becoming quite a luxury these days. So chances are that if you get work today, you’ll be out of work in the next 6 months to a year. I see this happening more often than not, and more and more so as time progresses.
So… if you’re one of the millions of dime-a-dozen engineer/programmer types who has their eyes on that cute lil’ $700k “starter” home in Los Gatos, just be aware that you are easily replaceable and its not exactly wise to count on your job to pay the mortgage 1,2,or 5 years out.
I sort of came up with what I think is a perfect analogy for California and the Bay Area: Its really great and really awful- at the same time. The problem is that the awful part is getting to be just a tad louder these days.
March 15th, 2010 at 6:07 pm
can you be held liable for encouraging suicidal thoughts over the internet?
March 15th, 2010 at 6:20 pm
> course’ you’re also forgetting rather important things like property taxes, repairs and so on.
I’m not forgetting anything: we were talking about debt-to-income ratio.
March 15th, 2010 at 7:50 pm
can you be held liable for encouraging suicidal thoughts over the internet?
Some courts have said “yes” (re: cyber-bullying).
March 15th, 2010 at 8:29 pm
$800K
10% downpayment
$720K mortgage
30-year fixed at 5%
$3,865 monthly mortgage payment
45% ratio
$8,589 monthly income
$103,069 yearly income
Except you forgot about those pesky taxes. If you gross 8.5k a month, you probably take home about 5.5k. Figure mortgage deduction pays property taxes. Thus, you take home 5.5k and pay over 4k for “owning” your home. This obviously doesn’t work. If you’re taking on a 720k mortgage payment, you better be taking home at least 8k-9k, which means grossing at least 150k a year.
But you’re right. A lot of people took on that kind of mortgage payment making around 100k. Those people are and will continue to walk away since they are substantially under-water and could rent the same thing for 2.5k
March 15th, 2010 at 8:45 pm
Ok, add $10K for the property tax. That takes you to $113K. Big f***ing deal in the bay area…
March 15th, 2010 at 8:48 pm
yeah! you could find that in my couch cushions…
March 15th, 2010 at 9:13 pm
10% down payment? What planet are you from?
In any case, check out the salary of these San Jose government workers. A lot of them can easily pay off the house after 1 year of work. After that, it’s basically free lifetime income.
March 15th, 2010 at 9:33 pm
>>oh anon, you’re echoing one of RealEstater’s main arguments for purchasing a house: maximizing leverage.
In today’s ultra low interest rate environment, you want to borrow as much as possible, because the more you borrow, the more you save. When inflation hits, you can pay back the house with worthless money.
March 15th, 2010 at 10:14 pm
oh RealEstater, you’re echoing yourself. Your parietal must have been enhanced for optimal acoustics.
March 15th, 2010 at 10:49 pm
In any case, check out the salary of these San Jose government workers. A lot of them can easily pay off the house after 1 year of work.
—-
LOL! After one year of work? Let’s see. The top earner of City of San Jose is Deputy Fire Chief James Carter with annual income $433,489. Next one is McGhee $284,245.
I am pretty sure they can do it, only if they buy some trash in East San Jose.
March 15th, 2010 at 11:08 pm
What an idiot. Probably doesn’t know how to read a table.
March 15th, 2010 at 11:12 pm
> What an idiot. Probably doesn’t know how to read a table.
You’re absolutely right. That is, if you were talking about yourself.
March 16th, 2010 at 8:42 am
DreamT,
Based on logic most reasonable people would agree with (interest rate is at historic lows; huge government debt will bring inflation), #58 better be echoing in everyone’s mind. Even if someone bought at the peak and is now “under water”, it won’t going to matter in the long term, because inflation will erode the debt, and home prices will certainly appreciate to a level higher than any previous peak. Such scenario has happened over and over again, and this time is no different.
March 16th, 2010 at 8:56 am
Historically low interest rates inflates prices.
When rates rise, prices will fall.
For those contemplating buying for the first time, it is better to wait for rates to rise and prices to correspondingly fall so that you take on less debt. You then refi when rates fall.
—
It is far better to pay a low price with a high interest rate than a high price with a low interest rate, even if the mortgage payment is the same either way.
* Your property taxes will be lower with a low purchase price.
* A low price gives you the ability to pay it all off instead of being a debt-slave for the rest of your life.
* As interest rates fall from high to low, house prices increase.
* Paying a high price now may trap you “under water”, meaning you’ll have a mortgage larger than the value of the house. Then you will not be able to refinance because there you’ll have no equity, and will not be able to sell without a loss. Even if you get a long-term fixed rate mortgage, when rates inevitably go up the value of your property will go down. Paying a low price minimizes your damage.
—
http://patrick.net/housing/crash.html
March 16th, 2010 at 9:12 am
Historically low interest rates inflates prices.
And interest rates have done nothing but fall for the past twenty years, aiding the rise in home prices.
March 16th, 2010 at 12:18 pm
Yep. And how likely is it that rates will stay low after the economy has recovered in earnest? Zero.
It will be curious to see how much rates rise in the coming months since the Fed is phasing out its program of purchasing mortgage backed securities to keep rates artificially low. Most say expect a .5 to 1% increase.
March 16th, 2010 at 1:10 pm
What an idiot. Probably doesn’t know how to read a table.
—-
What an idiot! Can’t filter San Jose govt employees from whole bay area.
March 16th, 2010 at 1:19 pm
Based on logic most reasonable people would agree with (interest rate is at historic lows; huge government debt will bring inflation)
—-
Logic and Faux Estater? LOL! Faux Estater carefully kept unemployment rate and wage increase out of equation so that his so-called “logic” sounds reasonable. Try harder, Faux Estater.
March 16th, 2010 at 2:02 pm
Pralay, RE can only handle two variables at a time.
March 16th, 2010 at 2:40 pm
and home prices will certainly appreciate to a level higher than any previous peak. Such scenario has happened over and over again, and this time is no different.
—-
Really? Heard about a city called Detroit?
If your primary argument is “past performance is guaranteed for future”, you are not arguing that smart.
March 16th, 2010 at 3:00 pm
RE can only handle two variables at a time.
—–
If he could handle ONLY two variable consistently, that would make him honest. But his variables change over time. The only consistent message is “right time to buy”. For example,
1. Want to weather recession? Buy home in RBA.
2. Want to profit from mass hysteria? Buy home in RBA.
3. First time buyer and want to get into the market at bottom level prices? Buy home in RBA.
4. Don’t want to miss window of opportunity? Better buy your home “this” year (BTW, “this” year was 2009).
March 16th, 2010 at 9:06 pm
> Pralay, RE can only handle two variables at a time.
you’re over-estimating by two.
March 18th, 2010 at 6:14 pm
Yep. And how likely is it that rates will stay low after the economy has recovered in earnest? Zero.
Oh yeah…. Interest rates. Almost everyone has conveniently forgotten about those. The way I see it is that the housing market has about only one way to go: down. Reason being is that as soon as those rates are raised, prices will adjust accordingly to compensate because at the current rate houses are barely selling and if they do, they are selling for either less or at levels that isn’t inflating overall housing prices.The prices are at levels most people still cannot afford. What is selling is at the absolute max those who buy can afford. Thus without government tax cuts, a rise in interest rates would cause the whole delicate market to implode overnight.
March 18th, 2010 at 6:18 pm
bob, when median sale price increases 24% in one year, increasing the interest rates would certainly slow this down but there’s no guarantee you’d see the median sale price suddenly collapse or even decrease. Raising interest rates work as brakes rather than a wall of brick.
March 18th, 2010 at 8:08 pm
> The way I see it is that the housing market has about only one way to go: down.
Are you saying it will never go up again? Ever?
That’s a bummer.