Friday, February 16, 2007

SL's Water Cooler - February 2007 (part 3)

Post off-topic links, observations, and stories here. Please read the comment policy before posting.


Perfect Storm said...

Anybody been out in the Norwood Rio Linda area. A bunch of dip stick builders are putting up a bunch of new homes in between a sea of of just pure crap boxes. I noticed a lot of the finished new homes are sitting empty. Who in their right mind would buy a new home with a neighbor that raises chickens and goats next door.

You go up far enough in dirt linda and the freeway access sucks.

Perfect Storm said...

With the Realtwhores touting the market is turning around you would think Maxx's Flippers in Trouble list would be decreasing. Oh yeah and lender imploder would be out of business.

Were on track for a 50% decline by 2009.

Sippn said...

PS - Read your comments on the Bee site. You might be taken seriously if you did a little less ranting. BTW Fair Oaks village gets a premium for those chickens.

Lander, Max - noticed that most of the inventory bubble - the gain vs last year is in the $300-500k range. Is it spread evenly across all price ranges or concentrated? Feels like higher end has been moving. I almost wonder if you took all the FIT's from the inventory if the number would then look normal (not 2005 normal, but 2003 normal)

Perfect Storm said...

I'm I ranting too much? I believe the rules are no profanity or racial comments. Lander did delete one of my comments that did not contain either, but was directed at another poster.

I have to say my comments are passive compared to Ben's Jones Blog, where housing bulls dare not visit. My understandig Ben Jones's Blog gets a 100,000 plus hits an hour. I bet the National Association of Realtors wish they had those numbers.

Ben is the best!

Perfect Storm said...

I’m really getting tired of the assertion that the economy is strong. On what basis are people making these statements? Does the economy equal the price of the Dow? What about the record debt and deficits this country is responsible for? What about the dollar being worth less than one-tenth what it was 90 years ago? What about unemployment numbers that have been cooked to show employment in the best possible light? What about manufacturing of anything virtually eliminated in this country? What about GDP numbers being revised downward months after the initial overly optimistic came in way too high when no one is paying attention anymore.

Strong economy my a$$.

Poster from Ben Jones Blog.

Sittin' Out This One said...

Typical Sacramento Area Flipper Tragedy: Another one bites the dust

A 2860 square foot house in Rocklin on Arnold Drive was advertised for sale in February 2006. The sellers ran a curious add in the Sacramento paper, something like this: “Auction, best offer over $589,000 wins on Sunday”. Evidently, an “investor”, used a single woman from the “valley” to buy the house in her name, using her credit. They paid $495,000 using sub prime 80/20 financing from Aegis Wholesale Corp. They put in new floor coverings and painted the kitchen cabinets in an awful “antique” motif, probably to hide imperfections, without investing more than the price of a gallon of paint.

I went by the house on Saturday morning in 2006, just to see what the “auction” was about. Well, you put your name and a bid price on a piece of paper, and they called you back if you “won”. If you did not “win”, they called you back to see if you wanted to increase your offer! Talk about losers! Anyway, I went back on Sunday night, just to see what kind of activity they had: Nothing. The bid sheet was blank. My friends and I had to leave quickly, because we were trying so hard not to laugh. It was really pathetic.

Fast-forward 12 months to February 2007. A short sale has now been completed for $450,000. Assuming the bank worked the Realtors down to 1.5% each, the lenders took a $60,000 hair cut, split between the holder of the 1st and the 2nd, with the second mortgage taking the brunt of the fall. The woman, in whose name the property was purchased, now has NODs on her credit and probably a “deed in lieu” filing.

The new buyer is an Asian couple, looking to rent the property as an investment. They put $180,000 cash down (yes, don’t faint, some people actually save money to use when purchasing real estate). They are asking a rent of $1800/month, or $21,600/year. After taxes, bonds, insurance, maintenance and vacancy, they will net about $12,600/year in rent. Their debt service will be about $20,000/year, providing them a negative cash flow of $7,400/year.

They will have to hold this property a long time to break even. House values and rents are still dropping in this area. They fell 14% last year, and the NAR forecasts a 6% drop this year (the NAR forecasted a 2% gain for 2006, so you can see their optimism from last year has been muted). An article in the December 25th Business Week suggests Sacramento will not see appreciation to 2005 levels until 2015 or 2020. So lets say we decline 6% next year and hold there for 4 more years. Mr. and Mrs. Investor will have a house worth $414,000 in 2012, and will have forked over $37,000 more to carry the property at 95% occupancy.

I don’t think they ran the numbers or visit this blog very often. Otherwise, they would know the scenario under which they purchased the house will lose them $73,000 on an investment of $180,000, leaving them with $107,000 before transaction costs. I suppose they could do worse, but if they put their $180,000 in 5 year T-bills, it would be worth $214,000 in 5 years. Hmmm, buy real estate and be worth $107,000 or buy T’s and be worth $214,000. I guess the prospect of owning and managing SFR rental property is just to exciting to pass up.

Patient Renter said...

If you thought the forclosure graph at Piggington's blog was crazy, check out the inventory graph!

Do we have something similar for Sac?

Patient Renter said...

Sittin' Out This One:

Good write up!

Max said...

Lander, Max - noticed that most of the inventory bubble - the gain vs last year is in the $300-500k range. Is it spread evenly across all price ranges or concentrated? Feels like higher end has been moving. I almost wonder if you took all the FIT's from the inventory if the number would then look normal (not 2005 normal, but 2003 normal)

I've been publishing price-level inventory for quite a while. Though I don't have historical data going back to '03, I can tell you that the biggest inventory increases were in the $200K-$400K price ranges. The overall market asking prices were falling during that time, so I think it's safe to say some of that increase was due to price drops.

As for removing FITs, I think the exact opposite would be true. Some of the lowest relative prices (per sqft) are FIT listings. I haven't run the numbers though, so I can't say for sure.

My gut is telling me that the un-"motivated" market is pricing at recent comp listings, not recent comp sales. In other words, collective denial.

Max said...

Do we have something similar for Sac?


Sacramento Regional Real Estate Trends for February 17, 2007

paranoid renter said...

We can't be going through gloom and doom...just look at the traffic. When the bay area went through its tech bust, the traffic improvement was huge within just a few months. I will buy the "housing bust" story only when I see traffic improve around here.

anon1137 said...

The SF Chron is doing 2 stories on BA home prices, the 1st is available today:
A money pit? Maybe it's more like a pendulum

U.S. Census Bureau data show that in 1979 the Bay Area median home price of $99,600 was almost five times the median household income. In 2005, the median home price of $645,300 was almost 10 times the median income. Not only does this wider gap make it more challenging to buy a home, it has altered the social dynamics of towns.

Perfect Storm said...

I think traffic has been decreasing. The tough commute seems to be for all the people from Roseville.

They need to build more bridges in this town.

paranoid renter said...

About the article on SF Gate.

I think the thing they are missing is the fact that we now have many households where both partners work for high-tech companies (i.e. they both make above the median salaries) and often one of them is doing a lot better than the other (courtesy stock options).

If at all, the article is a confirmation that we are slowly moving to a point where the median home price is a higher multiple of the median income. We may have a slight correction, but you have to look at the way people live in the Bay Area to know it isn't going to crash.

3 or 4 friends getting together to buy a house (which is quite common in the Bay Area) to build equity is a relatively new phenomenon and it won't be going away anytime soon.

Diggin Deeper said...

Perfect Storm

IMHO, you are right on the money! The economy has been building on this house of cards for the last 5 years. The real key is what happens to the dollar over the next several years. Liquidity is at its highest point ever. More and more dollars are flooding the market creating tremendous inflationary pressure. The government reports PPI and CPI as being tame and within inflationary targets. Really? I can tell you I feel the pinch of higher prices every day and I'm having a hard time believing the numbers that come out each month. They just don't track with fiscal pain that most Americans are starting to feel. When the cat does fight its way out this bag, the only way to hold inflation in check will be wage and price controls or higher interest rates. If the real estate market is suffering it will dive into a coma when there's no way to mitigate rising prices than to raise rates. Then the air really does come out of the balloon. When you add it all up...high consumer debt, ballooning trade imbalances, high government budget deficits, entitlement programs that are fiscally out of control, financing a Trillion dollar war, and negative consumer savings rate, there are few options left on the interest rate side. If rates escalate anytime soon, all these real estate numbers that we see today will accelerate to the upside and prices will have no choice but to come down. Liquidity equals inflationary pressure. Its fairly simple. Either take dollars off the table, or watch prices move to the upside.

anon1137 said...

Aura update in sacbee today:

. . . says Craig Nassi, the Denver developer behind the long-awaited Aura project at 601 Capitol Mall.

He says he reached the sales threshold he needed for a construction loan last fall. Since then, he's held off sales in the expectation he can get higher prices for the remaining units after construction begins.

"We do that on every project," Nassi says. "You get a lot more money (for condo units) later in the game."

Nearly 200 of the project's 268 units have been sold, according to Hanley Wood Market Intelligence.

Patient Renter said...

Yea I saw that... In theory what he is saying makes sense, except that he's saying it in a declining market, so there's no guaruntee at all that his condos will be worth more when the towers are further progressed.

anon1137 said...

PR - I guess you have to have quite an imagination to get involved in a project like that, so why not imagine higher prices in a couple years? There's going to be enough luxury high-rise condos in Sac to house all of the Google and Yahoo and Ebay retirees put together.

On another note . . . Sac midtown flip (definitely not in trouble):

I was doing a search on the net to see if I could find the sales price of a midtown bungalow that I saw listed late last year, 1615 26th St. It was originally listed for $695K, then reduced to $670K or so, then went pending and disappeared. Anyway, my search turned up the previous sales listing from 10/2005 ($435K) ( It was evident from the photos on both listings that the 2005 buyer had extensively remodeled the house, nearly doubling the ft2, I think, but I'll bet he still made a tidy profit. This kind of thing has been going on a lot in the 95814/16/19 for the past few years, a nice trend, I think. There are some beautiful old homes in midtown and ESac, but many are thrashed. Still, $650-700K is a big price for a smallish house on a tiny lot with no garage.

Jeff said...

1 in 5 Sacto houses are now short sale. This is a story out of the USA Today.

Patient Renter said...

Mortgage News Daily tore into Lereah, finally:

Not only is Lehreah’s forecast typically optimistic, but while the report did say that sales were down or prices fell in this region or that, the only specific areas which were mentioned (Salt Lake, Pittsfield, Port Arthur) were where sales improved or prices were up. The report went so far as to fall back on reporting that typical sellers in metropolitan areas “experienced healthy gains on the value of their homes over the last five years in almost all 131 available areas, even in areas with recent price declines”…

NAR stands to lose credibility unless it also loses its Pollyanna approach to reporting the data for which it pretty much holds a monopoly. Realtors and by extension their customers and clients, rely on this information to price homes and set business strategy. It is time that NAR bites the bullet and get real about the full measure of statistics it collects. It is a public service to do so and even the most transparent of cover-ups eventually has drastic consequences.

Diggin Deeper said...

Not to worry about Lereah. He and NAR lost all credibility months ago. It's a shame those that need to buy and sell today look to these organizations for help. Kind of like the captain of the Titanic refusing to acknowlege the ship's taking on water. On an aside Home Depot just reported 4th Qtr earnings 28% lower than last year due to the housing slump. Lowes numbers probably won't be much better.

Sippn said...
This comment has been removed by the author.
Patient Renter said...

"He and NAR lost all credibility months ago."

The Wall Street Journal and other supposedly quality publications are STILL quoting Lereah in articles without quoting anyone else (contrary opinions). Either it's an amazing lack of quality journalism or the journalists genuinely still don't have a clue that the man is a fraud. Either way, it's not good.

Diggin Deeper said...

One thing that's interesting and possibly overlooked is the demand side of the real estate market. If creditors have to tighten their lending standards in order to write new mortgages and create higher spreads between subprime and conventional loans, would it make sense that a fairly wide band of poorer credit borrowers goes away? In year's past, anyone regardless of credit history, could afford borrow enough to buy a home. If credit standards force marginal buyers out, it would make sense that demand would also feel the pinch of fewer buyers in the marketplace.

Jeff said...

Interesting info around Roseville Condo market: 2 places which advertised as owner occupied only units are now allowing people to rent directly from the builder. I have friends at one complex and they're frurious about having people rent while they bought. They're purchase contract even mentioned no renting. They'll probably have some lawsuits around this but it might be cheaper for the builder to hire lawyers instead of losing money trying to sell the condos instead.

paranoid renter said...

Most of the condos in the Roseville area are really ugly - bad floor plans. I wouldn't want to buy them even if the price were right. And then go jack up the price by loading up a poor floorplan with all kinds of luxury features that one really doesn't need. It's sad. What is really sad is that unlike the tech boom, this boom will have caused a lot of land to be developed with junk so we'll be seeing that junk forever.

Sippn said...

When you look for condos, look for a recognized and experianced builder. This is the first place newbes (warm body, loan and license) try their stuff when building is hot - when building is hot, a lot of juck gets built, and the junk brings down (helps) the whole market.

anon 1137 thainks for the sf link - 10x!

Gwynster said...

NPR did a piece on the Natomas leeves this prime right at primetime 7:50 am

paranoid renter said...


Looks like the housing slump is over.

What are some of the good condo builders in the Sacramento/Roseville area?

Patient Renter said...

Gwynster: Thanks for the heads up on that story. This was an excellent story and surely an eye-opener for everyone outside of the area who heard the (national) story.

lexi said...

Real housing bottoms require
a reduction in inventory, motivated
buyers and affordable prices.
Untill these things happen calling
the bottom is just wishful thinking. Inventory just keeps
rising... and prices will just
keep declining because the housing
is overpriced. Someone might
want to pay 10x their income
in San Francisco or New York, but
Sacramento even at 5x is overpriced
for this cowtown.

Gwynster said...

Sacramento is sitting at about 7.4 x median household income. I'm waiting for my 2006 us census numbers. Impatiently I might add.

lexi said...

"Sacramento is sitting at about 7.4 x median household income. I'm waiting for my 2006 us census numbers. Impatiently I might add."

Oh, over 7x the medium. Even further to fall! Look out below.

ralphk said...

I guess I just don't get it.

We see what is happening with shortsales, foreclosure and the subprime lenders.

So just how does the average $50k annual income person purchase a $500k home on a 30 year fixed loan with 20% down?? Or $400k?

Either the use of option arms, interest only, no doc etc., loans continues or prices drop.

paranoid renter said...

So just how does the average $50k annual income person purchase a $500k home on a 30 year fixed loan with 20% down?? Or $400k?

Average person who has no home equity or rich uncles is priced out. Sacramento still has a lot of people moving here from the Bay Area, so they have enough equity to make that a $200K or less mortgage.

Patient Renter said...

"Average person who has no home equity or rich uncles is priced out. Sacramento still has a lot of people moving here from the Bay Area, so they have enough equity to make that a $200K or less mortgage."

Regardless of whether the buyers are local or from the Bay, at some point the people with existing equity dry up as prices continue to decline, and the market will be left with investors (who are gone) and first time buyers (who are still priced out).

Gwynster said...

People are leaving and voodoo loan products are going away. No matter how you slice it, first time buyers are drying up and they are the only thing that could keep the party going.

1 in 5 is now a short sale in this area. How do you sugar-coat this? I don't see a way. The cat is out of the bag.

Jeff said...

More subprime implosion...

Jeff said...

Sippin, you have something in common with the NAR President, you're both bullish on RE. And yet this guy is losing money. Good stuff considering this guy keeps calling the bottom as RE fights each month to blow out the previous bottom.

Sippn said...

I only got so many hands...

Bullish in RE long term. It is so rarely a short term investment, unless you improve it.

Are you a nomad?

Paranoid Renter - unfortunately the average $50k salary is not the average buyer, the average buyer is the top 60% of wage earners, not the middle 60%, so the number is much higher. Typically 2 incomes.

Sorry not really following the condo market. Try a Realtor who does.

ralphk said...

To me, the issue has been affordability. It really doesn't matter if it's 100% or 90% or 80% financing with an exotic ARM or 30 year fixed.

What it comes down to at the end of the day/month - can you make the payment??

Sippn - "the average buyer is the top 60% of wage earners" Are you saying Sacramento is mostly comprised of the top 60% wage earners, because there sure were a lot of expensive (to me) houses sold in the last couple of years.

I didn't realize ole cowtown was that affluent.

Gwynster knows the numbers far better than I, but I really doubt that we have that many top tier earners.

Real said...

Ralphk: Are you saying Sacramento is mostly comprised of the top 60% wage earners, because there sure were a lot of expensive (to me) houses sold in the last couple of years.

You are missing the logic of the argument. Sacramento only has a 60% home ownership rate. The argument Sippin is making (I made this argument and gave the data behind it 2 weeks ago) is that since only 60% the city's population is homeowners, affordability should be in terms of median of those 60% that own homes. If you take that logic, you get a number of ~$87K so the multiplier is about 4.5x vs. the 7x+ that was posted earlier.

Let's face it - Sacramento is not going to have 100% home ownership ever - some people will never make enough to own a home without wheels on it. Since this is a fact, a 'median' or 'average' income metric of 100% of the population (40% of which will never own a home) is the incorrect framework for a discussion on affordability.

lexi said...

Well, if the high earners are
the ones that can afford to buy
a home.. it's almost certain
they already have bought a home..
if the 40 percent can only
afford homes on wheels then..
who's going to buy all the inventory on the market? Seriously, can anyone tell me
who's going to be buying the biggest inventory of homes that
the US has ever seen? I really
can't figure it out? All the while
the people that should have bought
homes on wheels are foreclosing and
adding to the inventory. I guess
I'm too dumb to figure it out.

Sippn said...

Thank you Real - I saying that the bottom 30-40% of wage earners who are not homeowners have little affect on home prices, except rent.

In world class cities like NYC and SF, ownership by those who declare residence in other locations and/or corporations help push the 10x number without actually being accounted for.

Real said...

Seriously, can anyone tell me
who's going to be buying the biggest inventory of homes that
the US has ever seen?

#1. Inventory in the Sac market is at 4 months for existing homes sales and down 50% from July. By definition, this IS NOT the biggest inventory we have seen.
#2. Even at 10K homes, it represents about 4% of all homes in the area. Given population increases in Sacramento every year and a lot of the homes are sold by one exisiting buyer and then bought by another existing buyer (75% of purchases are done by exisiting home buyers), this inventory is not really that significant.

The true piece of the puzzle that could hurt the market is new home builders. They could pump out low cost homes if they have completion causes, etc and could choose to excersise land options and build those out as well. However, what we have seen is a willingness from builders to stop new starts (starts are down big time over the last 2 years) and they have walked away from land options. So, they will not kill the market by flooding with new homes and we will be left in the short term with simply exising home sales - which can be supported 100% by the existing home owning population.

paranoid renter said...

Interesting article on where the economy may be headed. (Despite all the innovation/job growth at Intel. :-))

paranoid renter said...

However, what we have seen is a willingness from builders to stop new starts (starts are down big time over the last 2 years) and they have walked away from land options.

Last I checked they were still building stuff and having to offer 50-100K incentives to get people tom buy...and this is off prices that are already lower than they were a year ago. They dropped the starts from unsustainable levels.

Real said...

Last I checked they were still building stuff and having to offer 50-100K incentives to get people tom buy...and this is off prices that are already lower than they were a year ago. They dropped the starts from unsustainable levels.

You didn't really respond to the point of my post:

1.) Did homestarts decrease?
2.) Did home builders give up land options?

I agree that for some projects that they must complete, they are building homes and trying to sell for whatever price they can get, but the land they have available to do that with and land where they have the insentive to do that with is going increasingly scarce. Take the home auctions from 2 weeks ago - why only 6 homes and not auctioning off a whole new development? The answer is simple - the homebulders are not stupid and realize it is the land that has the value and margin tied to it, not a low budget house.

Patient Renter said...

"#1. Inventory in the Sac market is at 4 months for existing homes sales and down 50% from July. By definition, this IS NOT the biggest inventory we have seen."

You're pretty good at pointing out worthless information, or maybe you missed the current inventory chart that has us well on track to shatter all previous inventory records for the region? Check back in 6 months and we'll see how you try to BS your way around inventory.

ralphk said...


I absolutely refuse to pay $391,000 (4.5 x 87k - your median income)for the type of house that much money will purchase.

However, I might be interested in the same house at $261,000 (3 x 87k.

I guess value is in the eye of the beholder.

At $261k I can't afford to rent. At $391k I'd be foolish to buy.

lexi said...

Fools rush in ... bubble sitters
wait, realtors and mortgage brokers
try to change bubble sitters into
fools. If the market is so great
why is everyone trying to convince
the dumb old bubble sitters? I guess they need fresh fools.

Patient Renter said...

Let's simplify some of the back and forth stuff that has been posted recently.

Ultimately, all of this argument boils down to now either being a good time to buy or a bad time to buy. What makes it a good or bad time to buy depends on where prices are going in the near term.

For almost *all* circumstances a rent/buy calculator will show that flat or negative appreciation will benefit the renters, while positive appreciation will benefit the owners.

So, does short term appreciation look flat, negative, rising? This is all the end point of all argument.

Lander said...

Inventory in the Sac market is at 4 months for existing homes sales and down 50% from July. By definition, this IS NOT the biggest inventory we have seen.


Perhaps you could again explain how you came up with the 4-month figure. Last time you cited this in January, I explained how your calculations were flawed. Has something changed since then?

Based on your method of calculation (Inventory/Sales), supply in December was at at 7.4 months per In January, inventory increased and sales went down, so supply is even greater for January.

Real said...

Lander:Perhaps you could again explain how you came up with the 4-month figure. Last time you cited this in January, I explained how your calculations were flawed.

Lander, I am simply taking the quote directly from the article that YOU posted from the USA Today


"Though there's only a 4.3-month supply of homes for sale — a bit lower than the long-term average"

You may want to actually read the articles before you post them to your blog in the future. I know this is your blog so you probably won't take this comment to heart, but the way this group of posters continues to make wild claims without providing any stats, facts, or knowledge of the subject they are posting on makes reading this blog a waste of my time. My patience with trying to stop them from making assinine statements have run out. Enjoy your blog, I will find somewhere else to spend my idle time.

lexi said...

Well, it would be frustrating
with the majority people on this
blog being of the mindset
of it being a bad time to buy
in this market. According to figures released Thursday by the California Building Industry Association today, Sacramento
was named the 16th most unaffordable housing market in
the United States. With foreclosures now 1 in 5 of the houses for sale, it's understandable how bulls could get
a little tired of touting..the same
old story of things are fine in
the world of Real Estate when information daily is to the contrary. To answer another question by patient renter...
I believe no question.. it's
negative money in the short term
for sure right now... and that
will change to flatlining for a few
years. If I were to make a guess..
2011 is when prices will start to
slowly appreciate again.

Patient Renter said...

"Enjoy your blog, I will find somewhere else to spend my idle time."

I can't remember, after the last time you said you were done posting here, did it take you a week to come back or was it longer?

Anyways, as one of the contrarian posters here, you'll find that your posts won't be taken very seriously unless the contain *relevant* information.

For example: Nobody cares if the January snapshot of inventory is X when the inventory trend clearly shows that it's on track to shatter the all time record this year (we're two months ahead of where we were this time last year). Touting one fact while ignoring a more important fact is a worthless waste of all of our time.

Sippn said...

Real - don't get mad - some of these people live to yell at you, me and a few others!

anon1137 said...

I think we should keep in mind that each of us is looking at the market from a different angle, so we're probably seeing different things but still describing them accurately from our own individual perspectives. For example, if I'm looking at the E Sac mkt, I'm seeing that prices have barely peaked, but someone looking at new homes in EG says the mkt is tanking and heading for a 50% drop, while Greenspan is looking at the national mkt (and trying to save his reputation) and sees (hopes) that a bottom might be forming in the spring (or maybe the summer, or the fall, or maybe 2008, or at least by 2009 if there's no recession . . . .).

Happy in SF said...

Boo hoo Sippn,
You are such a victim. You have been so kind in your posts.
And Real seems to have to rely on personal insults.

Real, please do. Don't let the door hit you.

anon1137 said...

Google employees (indirectly) support Sac housing mkt (sacbee):

Sacramento's housing slowdown probably won't be serious enough to do much harm to the region's economy, a Federal Reserve economist said Friday.

Although Sacramento's housing market has stumbled more than other parts of the state, the region's job market has stayed healthy, thanks in part to renewed growth in state government employment, said Janet Yellen, president of the Federal Reserve Bank of San Francisco.

"While the pace of employment growth slowed last year in the Sacramento area, as it did in the rest of the state, the state government's fiscal situation has improved over the past few years, and that's helped create new jobs locally and keep the area economy on a stable expansion path," Yellen said during a speech at California State University, Sacramento.

Sippn said...

Happy - then what would I do to entertain myself?

Honestly, there's no need to get mad and personal, if
I've said anything offensive, it was purely tongue in cheek (I hope).

Its nice to have somebody share part of my view once in a while so I can just say "me too".

SO HISF, what do you think about the SF castle/porn film studio?

lexi said...
This comment has been removed by the author.
lexi said...

David Lereah talking to CNN in 03:
Adds Lereah: "While baby boomers have been trading up for more expensive homes, their children are now 18- to 26-years old and entering the market" on their own. This younger generation is actually larger than its parents' generation.

At the same time, lenders are also more willing than ever to lend money to low-income buyers, extending credit to households that weren't previously eligible to purchase homes.

"You take all of these factors together and you've got a very healthy housing market," said Lereah."

Or a recipe for a bubble

paranoid renter said...

In case you guys look at, the links there are free again. He had started a subscription service for new links but looks like that has been discontinued.

One of the links there is about the coming great depression. Makes for interesting reading.

Gwynster said...

I was out in Rocklin today and stumbled across this house

5978 Woodside Dr, Rocklin, CA 95677

11/17/2006: $352,309
11/03/2006: $52,151
02/10/2005: $416,000

Built in 2003. It's back on the market, bank owned with the notices on the front door. I took pictures because the house right across the street was for sale too. Wild.

So much for Rocklin and Roseville retaining their value.

paranoid renter said...

Just found out about the Plunge Protection Team. Anyone know if that really exists? If so, it pretty much ensures that things will not get too ugly.

paranoid renter said...


According to, that doesn't look like it's too much out of whack with homes in that neighborhood.

Patient Renter said...

Piggington has a good post that points out positve price bounces being a historic norm, and something we should watch out for and expect during this decline.

During the 90s there were several price bounces, but of course the overall trend was down, down, down:

No doubt (mark my words) the Sac Bee and others will be joyfully announcing any such bounces should they occur in this cycle.

Gwynster said...


I wasn't surprised by the price as much as how many times that house changed hands since being built in 2003. The original owners held onto it for just 2 yrs and sold then it bounced around some more until now when it's bank-owned. I just hadn't realized how much people are bouncing around.

That seems to me to be an indicator of how unstable we've become as a population.

paranoid renter said...


Yeah it's definitely become all about chasing money. The days of people staying in one place for many years are gone. And you can blame people for it. Rising healthcare costs, all kinds of litigation, job insecurity due to things like offshoring, chronic cost-cutting and benefit-cutting by corporations have all caused economic insecurity to rise to an all-time high. Next phase, which we will see during the coming recession, is desperation.

paranoid renter said... my last post I meant to say that "you can't blame people for it".

Lander said...

It's unfortunate that you appear to be unable or unwilling to engage in conversation without tacking on gratuitous personal attacks.

Perhaps the following is in vain given your vow to not waste your time here anymore.

It appears that the USA Today article relies on SAR's December data for its inventory supply figure. I noted in a previous comment that SAR's inventory data is suspect, given the stark inconsistency with other data sources.

Regardless, if you want to rely on that source for your conclusions, you may want to look at SAR's most recent data for January (which has been available for a couple of weeks).

This is from SAR's January press release [pdf]:

January’s housing market supply figure - the active listing inventory divided by the rate of completed sales – took a dramatic jump to 6.6 months, compared to 4.3 months in December 2006. The supply level is 13.8% higher than last year’s January 2006 supply of 5.8 months.

You said: "this IS NOT the biggest inventory we have seen."

You're right. The biggest inventory (unadjusted for population growth) was last summer. However, the current inventory is likely the biggest ever for a January or February.

Gwynster said...

OMG I just got to check the markets for the day - thank god I moved all my retirement out of stocks into bonds about a month ago. And I have zero debt. The DH has one last student loan to finish and we're fini. Just in time.

paranoid renter said...


This is only a minor correction. Market could easily recover. That said, there are some folks who think even retirement money should not be invested in the stock market since it's too risky. However, google "plunge protection team" and maybe you'll feel better about the stock market.

Jeff said...

We'll see another 1000 point correction in the next 60 days. On a seperate note, looks like buyers again are refunding cash on the close of a home purchase, completely illegal:

Gwynster said...

I know all about the PPT. I read Ben's blog on a daily basis. I just don't trust them to save me - the individual - like I don't believe SS or even the police will be there when I need them. Being raised by woman who spent her childhood in 20's germany will make you a pretty savvy pessimist.

I've never been a huge fan of the markets and I don't like putting my retirement money there. I'd been looking for some 401k options and finally found what I wanted just in time.

I also agree that this is just the beginning but I'd been braced for the gentle downhill slope when we got a plunge instead.

Someone on NPR said the sudden drop was a computer glich. I'm not sure I believe that. I also hate that 200 drop lock-out mechanism they have in place. If we really have a free market, let it rise and fall without the training wheels.

atalba said...

How do I gain access to MLS homes under contract in Placer County?

Patient Renter said...

Gwyn: I heard the same comment on NPR about the "computer glitch". I don't buy it either, particularly since they were talking about so many computer having coincidentally failed around the same time. Doubt it.

BTW: For your 401k or IRA, I'm a big fan of John Bogle (vangard founder)'s philosphy of buy-and-hold investing with low fee investments such as indexes. I think this type of investing is a good fit for a pessimist, given a safe portfolio allocation. You might enjoy looking into this..