Here’s part 1643 of Proof there is indeed a Bay Area Bubble 4.0.

Housing Bubble Unlikely, Home Price Appreciation Should Slow – CoreLogic

BY JANN SWANSON, Mortgage News Daily
May 16 2013, 11:10AM

CoreLogic said today that home prices are projected to increase 3.9 percent on an annualized basis between the fourth quarter of 2012 and the same quarter in 2017.  However, a new housing bubble is not likely as market dynamics shift for both supply and demand.  Prices rose 7.3 percent in 2012.

The CoreLogic Case-Shiller Index report notes that the increase in 2012 was the strongest rate of appreciation in nearly seven years and projected that prices will continue to improve in 2013 and beyond in the more than 380 U.S. markets it tracks.  The company’s current analysis says that, "Cities at epicenter of housing bubble/crash are clocking highest rate of appreciation, largely driven by investor demand."

This map comes to us thanks to Burbed reader PKamp3, who linked us to the story in Business Insider. However they got the story from Jim the Realtor’s BubbleInfo blog, who in turn got it from Mortgage News Daily.  And it’s a good thing we traced the map (and story) all the way back to the original article, because it has some seriously amusing conclusions to anyone who lives Where It’s Special.  And that’s without making fun of the name of the Chief Economist for CoreLogic/Case-Shiller.  Nah, we’ll just make fun of his opinions of whether there’s a housing bubble:

Dr. Stiff tamped down concerns of another housing bubble. "Even if double-digit price appreciation were to continue in the former bubble metro areas, there is no reason to believe that new home price bubbles are forming. That’s because single-family homes in these markets are still very affordable, even after last year’s large price gains. Consider Phoenix, where home prices rose 27 percent since the market hit bottom in 2011, making it the strongest residential real estate market in the U.S. Yet, home prices there are still 45 percent below their 2006 peak," Stiff continued.

Yes, if you would consider living in a hellhole like Phoenix with summer daytime temperatures routinely above 110 degrees Fahrenheit, of course you’d note that these markets are still very affordable. But nobody uses the words “Real Bay Area home prices” and “affordable” unless they are separated by some sort of negating construction.

Lest you think we are making this up, the San Francisco-San Mateo-Redwood City metro is the least affordable in the entire country, with only 28.9 percent of homes affordable by a median income household. That’s right, we’re Number One again, beating out 221 other metros for the crown!  Santa Cruz-Watsonville is #4 (37.1%), while San Jose-Sunnyvale-Santa Clara isn’t far behind at #6 (43.3%) and Salinas (44.4%) at #7.

Where’s Phoenix, the brick oven that’s still 45 percent below their 2006 peak? They’re at number 57 in unaffordability.

Let us remind everyone that San Francisco and San Mateo Counties never dropped 45 percent below peak. The reason the San Francisco Case-Shiller numbers dropped as much as they did is because they’re completely weighed down by Alameda and Contra Costa Counties.

It’s the East Bay that dropped like a rock after 2006, not the Real Bay Area.  And like a pair of cement overshoes, the East Bay took the whole SF Case-Shiller index down with it. Even the upper tier (the top third of home prices) is affected by this home distribution.

And let’s check those East Bay numbers.  Oakland-Fremont-Hayward turns in a respectable #24 in the You Can’t Touch This index, showing it’s no Phoenix, either.

So we have some words for that Stiff Doctor: There is too a Bay Area Bubble 4.0. We see it every single day even outside the Real Bay Area. We see peak pricing. We see bidding wars. We hear from readers reporting lines to enter Open Houses, or appraisals coming in higher in just a few weeks, or as-is cash overbids on homes where the would-be buyers didn’t even bother going inside.

Inotherwords, Dr. Stiff, maybe you need to get over your Phoenix fixation and check out the parts of the country where the housing bubble is very much back.

Yes, another article about Palo Alto.  It seems nobody can have too much of that place.  Thanks very much to Burbed reader PKamp3 for spotting this article in the Fox News Journal.

Vehicle-Dwellers Call Palo Alto Home

By DEBORAH GAGE, The Wall Street Journal
SAN FRANCISCO BAY AREA Updated July 11, 2012, 6:17 p.m. ET

PALO ALTO—Kurt Varner moved to Palo Alto from Los Angeles in March to start an Internet company. But instead of renting an apartment, the 25-year-old has been residing in a different kind of abode: his car.

Every 72 hours, Mr. Varner moves his car around Palo Alto to avoid violating the city’s parking rules, and he tries to be as inconspicuous as possible to local residents and other car-dwellers. Mr. Varner sometimes does some rudimentary cooking at a co-working space in Mountain View, where he codes during the day. And he showers at a local 24 Hour Fitness gym. His total cost for the gym and co-working space is $139 a month.

Living in his car is the only way he can afford to be in Silicon Valley right now, says Mr. Varner, whose wife, a teacher, lives in Los Angeles. Mr. Varner, who has been effectively homeless for the past few months, says he can’t afford to pay rent on two places but will move into an apartment in the area this month when his wife moves up.

He says he is excited about working on something he is passionate about, but being homeless is “a little scary.”

So it’s not enough to find out that some people love Palo Alto so much they’ll live at the office.  Every single night.  Because they don’t live anywhere else.  Now we’ve got people living in their cars because it’s completely legal to live in your car in Palo Alto.

No wonder there’s only one mobile home park in Palo Alto.  There’s too much lowball competition!  How can Buena Vista possibly compete with BMW?

This is also your Weekend Open Thread, so have at it.  Did you see anyone living in their cars when you toured Open Houses this weekend?  Where are the best places to park?

And OF COURSE it’s in Palo Alto!  Thanks very much to Burbed reader PKamp3 for this one!

Woman hit with milkshake loses $2,000

Purse flies into vehicle after altercation in downtown Palo Alto

by Sue Dremann, Palo Alto Weekly Staff

A woman who was struck with a milkshake and angrily threw her purse at a vehicle full of teenagers lost $2,000 after the handbag flew into the open vehicle window, Palo Alto police said Monday.

The incident started Sunday, June 24, just before midnight, Sgt. Brian Philip said. The woman was walking east on University Avenue near Rudy’s Pub when a white Range Rover full of male teenagers driving recklessly southbound on High Street approached.

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Could this incident have any more “Yup, this is definitely Palo Alto” touches?  A Range Rover full of rowdy teens and an alligator purse with two thousand in cash?  Too bad it doesn’t mention whether the milkshake was garnished with Madagascar vanilla bean shavings.

This story was picked up by NBC Bay Area and even nationally, but there isn’t anything new in either of those stories.  Miss Lucy, reached on her belled steamboat enroute to Heaven, says to be sure to read the comments in the Palo Alto Online story.

Oh yeah, and this is definitely an Open Thread.

Burbed has visited this high-priced peninsula before, but we’ve never reported on a teardown at Hillsborough-with-Baywater.  Thanks very much to Burbed reader Pkamp3 for the find.

A $4.2 Million Tear-Down House in Belvedere, California

By ALAN FARNHAM | ABC News – Fri, Jun 29, 2012

In Marin County, California, where people tend to have money, people in Belvedere tend to have more. Even so, a recent decision by Clark and Sharon Winslow of 337 Belvedere Avenue to buy the home next to theirs for $4.2 million — and then tear it down — might seem extraordinary.

It’s not, say locals and real estate professionals.

“There are houses being torn down all the time,” says Bill Smith, realtor and ex-mayor of Belvedere. In neighboring Tiburon, he says, a buyer not long ago paid $20 million for the home of tennis star Andre Agassi and wife Steffi Graf, then announced his plan to raze it.

While the article specifically mentions the house that isn’t being torn down, we’re left to guess which property is getting the extreme makeover.  And we think it’s this one.

Update 9:30 AM: And we are completely wrong.  Burbed reader gallileo provided the evidence that it’s the house on the OTHER side.  Correct info added to end of article, because we hate to waste a good housing rant.

341 Belvedere Ave
Belvedere Tiburon, CA 94920
Sold on 01/14/2000 for $2,100,000

Source: Public Records
BEDS: 3
BATHS: 2.5
FINISHED SQFT: 2,831
UNFINISHED SQFT: -
TOTAL SQFT: 2,831
FLOORS: -
LOT SIZE: 8,400
STYLE: Single Family Residential
YEAR BUILT: 1964
YEAR RENOVATED: 1975
COUNTY: Marin County
APN: 06022128
LAST UPDATED: August 24, 2011

The interesting thing about buying and tearing down a perfectly good house isn’t that someone with way too much cash went ahead and did it.  It’s how much the house was worth in the first place.  Zillow says… ZEstimate of $1,876,100.  Which means the new “owners” spent more than twice what this house may be worth just to make more land.

Yes, the purchasers live in that 9524 square foot housing tumor on the left.  Let’s see what they got for $4.2 million!

Oh yeah.  Perhaps they’ll be tearing down this place next, since it’s blocking their Bay access.  (See #42.  Only 1017 days on Redfin!)

Update: Here is the correct house.  gallileo provides a link to SocketSite with the story, and there’s a further link to a piece in the Marin Independent Journal.  So, without further adieu, the actual house that was purchased for $4.2 million only to be torn down.  That and more, after the break.

(more…)

Last week we looked at a series of very expensive houses.  Let’s return to our Burbed roots and examine some less stratospheric home options.  Today’s featured façade is a Milpitas mansion, thanks to Burbed reader PKamp3.

436 COELHO St
Milpitas, CA 95035
$340,800

BEDS: 6
BATHS: 3
SQ. FT.: 1,962
$/SQ. FT.: $174
LOT SIZE: 7,975 Sq. Ft.
PROPERTY TYPE: Detached Single Family
STYLE: Contemporary
STORIES: 2
YEAR BUILT: 1964
COMMUNITY: Milpitas
COUNTY: Santa Clara
MLS#: 81215571
SOURCE: MLSListings
STATUS: Active
ON REDFIN: 30 days

Wow! What a price! This beautiful 5 bedroom 3 bath home has enough square footage for a large family. Grand entry with pillar columns opens into a large living area with fireplace. Some bedrooms downstairs and the rest upstairs. 1 full bathroom downstairs as well!

Here’s why PK thought we should check this one out:

How about revisiting a house which has been featured on Burbed before?

So… if it was featured on Burbed on June 17, 2011 for $674,950 and it costs $340,800 today… is a 54% annualized loss the new 7.2% gain?

Yes, indeed, this house was featured before.  Bet you didn’t recognize its new look above, either.

According to Zillow, the price was only lowered one other time from the original $674,950 “WON’T LAST!!” listing, to $660,000.  And if the place didn’t sell at $674,950 between May and October, slashing $14,950 off (a whopping 2.2%) should have commenced the overbidding immediately.

The new asking price has been sitting for a month, despite the amazing features of the house (Some bedrooms downstairs and the rest upstairs).  I know that when I buy a six bedroom house, I’m always really cheesed off when discovering some of the bedrooms under the septic tank.

Also, the price cut also reflects another cut: this new listing no longer features a view.  But the kawlums are still included.  Do check out the pictures on this new listing, though, as there are surprisingly few of the inside of the house compared to last time.  There are four different shots of the back yard, and every single one of them features the portable grill.

Meanwhile, three different Redfin agents have left comments on the house.  Let’s share in their expert opinion.

Question: Does the master bedroom have a Jacuzzi tub in it?  Second question: How come two out of three realtards can’t spell Jacuzzi?  J’accuse!

Here’s a great place for an Open Thread: right on top of a Can You Top This letter from the President of NAR (the National Association of Realtards). 

This is Ron Phipps’ letter to The Wall Street Journal in its entirety, because you won’t want to miss one single stupefying word of it.

Thanks very much to Burbed reader PKamp3 for mentioning this exchange in comments.

The Wall Street Journal would have people believe that hard-working, middle-class families are not affected by lower conforming loan limits, when nothing could be further from the truth ("More McMansion Subsidies," Review & Outlook, Nov. 1). The representatives in Congress who support higher loan limits understand that this is not a partisan issue, as you are trying to make it out to be.

The majority of markets impacted by the loan-limit decline are not high-cost areas. For example, more than 100 counties throughout the Midwest and more than 200 counties in the South have seen loan limits decline by more than $64,000.

And despite how your editorial tries to position the issue, the loan limits are not the same as reforming Fannie Mae and Freddie Mac. Allowing the mortgage loan limits to expire in October was an arbitrary decision. Creating more market disruptions before reforming mortgage markets will only hurt our recovery.

The Senate measure to reinstate the limits is temporary—restoring the higher limits while the housing and mortgage markets stabilize. Recently, economist Mark Zandi said policy makers could shore up the housing market by "extending the current higher conforming loan limits that are set to decline in a few weeks." Borrowers, not taxpayers, will bear the entire cost of the higher loan-limits provision.

As people across the country are trying to gain a foothold in these trying times, we need to give them the resources to do so. The National Association of Realtors applauds the members of Congress who are standing up for America’s families rather than turning their backs on them.

Ron Phipps

President
National Assn. of Realtors
Washington

Of course this is 100% Grade AAA horseapples and every one of us should feel stupider for having wasted three minutes in reading it.  In fact, this is such toxic waste even the WSJ editorial page couldn’t leave it without a response as an unsigned opinion piece.  (It’s behind the paywall, but the best way to find it for free, should this link not work, is to search for its title with teh Google.)

The Realtor Subsidy

Crony capitalism on parade.

To understand why 90% of U.S. mortgages are still underwritten by taxpayers, look no further than the nearby letter from Ron Phipps of the Realtors lobby. He makes clear that the Realtors, like the rest of the housing-subsidy crowd, are working hard to get Congress to reinstate a $729,750 loan-limit for Fannie Mae and Freddie Mac guarantees.

Notice how Mr. Phipps doesn’t mention that dollar figure, perhaps because it makes a howler of his claim that the loan-limit reduction in October to $625,500 is somehow a blow to the "middle class." As House Financial Services Chairman Spencer Bachus and several colleagues note in a November 7 letter to GOP appropriations conferees, "the lower loan limits only affect a very small slice of wealthier homeowners in high cost areas." Only 1.3% of all loans done by Fannie, Freddie and the Federal Housing Administration would be affected by the change.

And it goes on from there.  I’m sure you could write your own takedown of Phipps’ inane, self-serving, logic-free effluvia, and in fact I bet you could have a lot of fun with it.  I am chucking a bit noting the Wall Street Journal use the terms “crony capitalism” and “lobby” as if they’re bad things.  Should we look forward to them setting up a tent (mink-lined, probably) in Zucotti Park?

Here’s a few more things the WSJ neglected to mention but I’ll bring up.

• The “non-high-cost areas” affected purportedly include more than 100 flyover counties in the Midwest and 200 in the South.  Phipps neglected to tell you how many total counties are worth flying over, but I suspect it’s more than 300.
• A free clue: Georgia has 159 counties.
• Borrowers will bear the entire cost?  Oh, now borrowers fund their own tax deductions?  Then why is the deficit so high?  Do corporations fund their own R&D credits too?
• And remember, this is your Weekend Open Thread!

Burbed readers are a fascinating bunch.  One of them has put together some Bay Area-specific buying calculators, and wants you, the Burbed readership, to have a look.  Since you’re all so hard to please and think everything out there sucks, this is your opportunity to ask the author to make it suck less.

Please welcome Burbed reader PKamp3 and the Don’t Quit Your Day Job blog, introducing lots of boring math, charts, and stats.  Some of you should just go back to sleep, while others should start a second pot of coffee and get ready to dig on in.

Here’s an article I wrote with 2 RBA calculators attached. I wrote it kind of in a Burbed mindframe: “who the hell can afford RBA prices”?

Here’s a preview:

2362 LAURA Ln, Mountain View, CA 94043
$634,950

I can tell you before you click the link… using my default assumptions:(20% DP, 4.5% Interest, 30 Year Mortgage, 31% front end DTI.  You can change everything there.)  43% of Bay Area Households have the income to make the payment.  That’s 746,463, in the RBA 4… since I count Alameda County.

Might be interesting… now that I wrote the code I’m having fun looking at listings and running the numbers.  Maybe you can help come up with better house-hunter ranks?  I don’t want to spoil it, but based on home prices the rank changes.

Given how willing PKamp3 seems to be in helping make this tool more useful, please play with it and complain at length in the comments below.  I’ve already groused about the inability to put a cash amount rather than a percentage amount in the down payment, and noted that Alameda County’s presence in the dataset pretty much poisons the well of “Inner Bay Area” buyers.  It might be “Inner” but it’s not particularly Real.

Some of the limitations are due to what’s available.  Some cities have been removed from the dataset.  I felt that the RBA should be limited to San Francisco, San Mateo, and Santa Clara counties, with the possible addition of Marin.  Alameda County?  That’s a fine joke someone is playing on us.  Once those losers are removed, then we can talk about limiting the universe some more.  I would assume San Francisco residents probably don’t want to buy this crapbox in Mountain View, but you never know.

Head on over to the calculator and let us know what you think of this tool and how useless it is it could be improved.  Plug in some other home values and assumptions and see how many buyers you’re up against.  So, what do you think?  Do you see a use for this?  Or are you going back to sleep?