Is There A ‘Mad Dash For The Exits’?
The New York Times has this on public awareness. “A pyramid scheme is a foolproof way to make money, until it isn’t. What is the breaking point? Probably about the time some spoilsport whispers ‘pyramid scheme,’ and there’s a mad dash for the exits.”
“Echoes of housing prices? Not exactly. Still, an almost pyramid-like frenzy has engulfed some areas in recent years, with buyers convinced that within months they will find someone who will pay even more for them.”
“If there are whispers of a ‘housing bubble’..most people still haven’t heard them. As recently as a year ago, Gallup (found) just 23 percent of Americans were even moderately familiar with the term. In the latest survey, that jumped to 40 percent.”
“24 percent now say that a bubble is likely within a year..only 7 percent expect it in their own backyard.”
And here’s some info on a pricey backyard from the Santa Maria Times. “The UCSB Economic Forecast, delivered in Santa Barbara Thursday, said that overall, the state and region’s economies are strong, and are likely to stay strong for the near future. But the Forecast Project’s 2006 report was not without a few red flags.”
“There are several unknowns, and then there is the uncertainty surrounding the national, state and local housing markets. Locally, the folks at the Forecast Project predict the housing market will remain firm. a distinct departure from recent years, when the market could only be described as meteoric.”
“The report shows a very slight movement away from a seller’s market, to one perhaps a little friendlier to buyers, but not much friendlier. Median home prices for March tumbled significantly from February figures.”
“Here in the North County, for example, the median-priced home in March was $461,700, which is down more than $18,000 from February. Countywide, the dip was even more pronounced, the March median was $750,000, down $37,500 from the previous month.”
This is a fair question, given the inventory surge this spring. We should only have to wait a couple of months to see. I hope some Santa Barbara locals can get us up to date on their market.
Hello everyone,
Weht to a conference yesterday with a colleague and she stated that she had just purchased a house for 150,000. The house is three months from beginning finished and she stated the it had already increased in value to 170,000. Now i am no rocket engineer but that just blown my mind. Now I live in NC and this house is in Charlotte, NC, but to purchase a housing now in any market is just mad. I live 30 mile from Charlotte,NC and the housing scene here is D.E.A.D. Also, a housing that I toured in May of late year sold for 150,000 late December. Now it back on the market for 170,000. Now this clown is from Florida and I guess he wanted to escape the market there, but If he through it would be Better here, he will be saddly mistaken. This neighborhood that he purchased the house is beginning overrun with USDA low income mortage families. They are buying 160000 houses onthe government dime and paying minimum payments. The Homebuilder can not get regular people to buy so it is getting Low income USDA people.
Thanks for the info regarding the Charlotte area. I know someone who is thinking about moving there.
what are USDA People ? I thought USDA was a grading system for meat ?
US Dept of Agriculture
My N. VA neighbor has a spec home in Charlotte. Renter just went to jail, though . . .
Gosh I wonder if jail wages will pay the rent?
Charlotte is a pretty rational market with rents in line with ownership costs. Appreciaition does take place but it’s based more on neighborhoods improving/declining. (Chantilly, Wilmore, Midwood and Madison Park were all modestly priced areas 4 years ago that gentrification has pushing into the $200k+ range.) Plain ol’ tract development on the outskirts of the city isn’t the place to look for gains, however and flippers buying from builders will lose their shirts.
Any opinion on the Raleigh/Cary market? I’m not sure how far you are from there, but my wife and I are thinking of relocating from NJ. Is there a lot of room for negotiation there? It seems like there is a lot of inventory on the market.
At least if I am going to buy into a housing bubble, I am going to get a place that I will be happy in for many years to come, where I can make a meaningful down payment and where I can comfortably afford a 30yr. fixed rate mortgage. That’s just not possible for us in Northern NJ
“There are several unknowns, and then there is the uncertainty surrounding the national, state and local housing markets. Locally, the folks at the Forecast Project predict the housing market will remain firm. a distinct departure from recent years, when the market could only be described as meteoric.”
‘There may be a housing bubble somewhere else, but not in Santa Barbara, cause everyone wants to live here…’– shuuure! I bet those who run the Forecast Project are all Santa Barbara-area homeowners with friends in the local RE industry who have a vested interest in keeping alive the belief that a slow-down in their housing price wildfire will not set the stage for the mudslides which normally follow wildfires in coastal California.
For those of you who don’t think metaphorically, I predict that Santa Barbara prices will drop after the meteoric price increases of recent years, not level off. Forget about the high plateau scenario in the same way the US stock market forgot about Irving Fisher’s forecast in the 1930s.
I disagree. I do not think the likes of Oprah Wimphrey is going to have trouble pay their mortgages, upkeep or property taxes. Maybe the waitress and baby sitter will have a difficult time for purchasing those million dollar houses-however-Santa Barbara is basically in a class of its own I believe.
Some of those super rich will keep buying homes in SB, but they are not interested in anything less than $5M, so I predict a 50% drop for homes that are currently priced below $2M during the next 5 years and over 70% drop within 7 years. The county is losing middle class big time ( I’m one of them) and I just don’t see any support for middle-class homes.
What is the breaking point? Probably about the time some spoilsport whispers ‘pyramid scheme,’ and there’s a mad dash for the exits.”
ummm…. Is the NY Times calling me a spoilsport? And… I didn’t whisper it… I published it loud and clear and I saw them reading the blog myself! So it was hardly a whisper. :-/
Athena –
Love your photo on your blog — is that really you? I am curious about the NY Times — how did you “see them reading your blog”?
My site meter gives me reports on who visits the blogs. Nothing too personal- gives the location, time, date, ISP (comcast, pacbell, etc…) and if the domain is an organization registered to the IP then it gives it… There is a post on my blog called: “Who Reads Here” that I update with some of the interesting organizations that cruise the blog. I am positive that they must be reading everyone’s blogs, because lord knows why in the world would Sonoma be important to most of the organizations regularly viewing it other than they are probably interested in the housing bubble in general and found my site through the links on all the much bigger and better sites than mine… but anyway, the site meter gives some basic information so you can get the gist of who your readers are. They also show subscriptions… and I am definitely humbled by some of the organizations I see with subscriptions to the blog.
As for the picture… LOL… I found that and thought it reminded me of Veronica from the Archies and loved the horns and used it for my housing hell post.
Big secret- is I started the blog because I was irritated with a housing bull friend who I knew I couldn’t argue with until I had some data… so I went about finding data and ended up a blogstress….and while there may be some suspicions that the blog is indeed mine… when my mother and my daughter saw that picture on my site they said that where once some may have had suspicions… after seeing that picture there could be no doubt in the minds of anyone who knows me that it is mine! LOL…
my mother wanted to know WHO drew that picture of me… LOL… wish I knew… because while the resemblence horns and all is there… the picture is not in fact drawn of me.
“The Count
If No One Whispered ‘Housing Bubble,’ There’d Be No Worry
By HUBERT B. HERRING
Published: April 30, 2006″
FIRE! RUN FOR THE EXITS!!!
“If there are whispers of a ‘housing bubble’..most people still haven’t heard them. As recently as a year ago, Gallup (found) just 23 percent of Americans were even moderately familiar with the term. In the latest survey, that jumped to 40 percent.”
“24 percent now say that a bubble is likely within a year..only 7 percent expect it in their own backyard.”
The bubble is not here yet, but it might land in your very own backyard sometime soon, so keep your eyes on the sky, just in case it is coming in for a landing…
24 percent now say that a bubble is likely within a year..
Oh, so there’s not one now but there might be one in a year??? Can we conclude that 24 percent think that prices are going to shoot upward dramatically from their currently “non-bubble” levels???
Athena has a great post on her blog.
http://sonomahousingbubble.blogspot.com/
Nice.
awww… Thank you! I’m all blushing now!
But I did find it really irritating that the NY Times would cover the pyramidness of the housing bubble and then quote a poll that is so old… there are much better polls taken more recently … why use such old information?
Because this is the Times’s way of “whispering” -they dont’ want to p.o. their RE advertisers. They know they have to cover this thing to avoid looking like they have their heads up their kazoos, so they do it oh so softly. So their ususal m.o. is tiny story in biz section flicking delicately at a huge, serious problem, “conterbalanced” by a whole section’s worth of fluff stories, pretending everything is just fine, in the RE section proper.
You want to hear something even sadder than that… is the sonomahousingbubble blog makes news all over the country and even has a handful of regular international readers… and I swear there are maybe 6 people in Sonoma County that read it. The word bubble is so not in their vocabulary and not even a remote possibility in the world they live in- there is no reason to go looking for information about it on the Internet. WTF?
Many, if not most, homeowners do expect to retire “on the house” according to the Center for Retirement Research at Boston College.
But at the same time they are reducing their own equity by borrowing against their homes for other expenses. They may be counting on inflated home values that could fall by the time they are ready to sell and move. They may be counting on a resource they never really want to sell.
In other words, they may not be being very realistic.
At long last, global rebalancing is center stage in the world policy theater.
I saw a kid the other day with a t-shirt that said “Never Underestimate the Power of Stupid People in Large Groups”.
That describes this housing bubble/mortgage madness perfectly.
It also refers to a bunch of ILLEGAL Mexicans who we must deport. Last year the 100,000 spawn of illegal Mexicans in Los Angeles County used $276 million in welfare payments and other social services. If you think you are going to get any social security when you retire - THINK AGAIN. The big sucking sound you hear going toward Mexico City is where it will be.
I agree with you in sentiment if not in volume but please… not here.
Yes the government is stupid and pandering. Illegal immigration is the tip of that iceberg.
Republikkkans will never do anything about illegals. They need the slave labor to keep everyones wages depressed.
it works exactly the same in Europe; you have the Mexicans, we have the people from Poland etc. who drive down wages and (to be honest) work a lot harder for their money than most natives.
And yes, the people at the top need this slave labor so they can get a 20-30% higher paycheck every year (that’s what I’m seeing in my country, probably it’s the same in the UK and some other EU countries).
“Never Underestimate the Power of Stupid People in Large Groups” is Machavelli updated by Napoleon Bonaparte.
“Never ascribe to malice, that which can be explained by incompetence.” - Copy to Clipboard
— Napoleon Bonaparte
“Sufficiently advanced incompetence is indistinguishable from malice.” - Programmer’s expansion of Murphy. [with a hat tip to A.C. Clarke]
My favorite quote is from my daughter. Her dad and her were having an argument and he responded to something she said with: “Don’t insult my intelligence.”
She responded with: “Well, why not? You seem to think it is perfectly fine to insult mine by having none of your own
I had to run into the other room to laugh
Is this what the bubble looks like?
How many of those visits are people looking for homes and how many are tracking the bubble?
Actually, not really. A bubble is more exponential.
The graph is certainly contributing evidence though.
Yes, that is one face of the bubble, and this is another…
http://tinyurl.com/qacvr
… and another …
http://tinyurl.com/mbh3l
oddly enough last month two thirds of lenders said there was a bubble in a widely published poll…and every one in the re biz who isn’t delusional or terminally stupid (almost half) has been willing to admit it …last year they looked around and whispered,this year it is “well, yeah”.not much movement yet in my part of sonoma county,but you can hear and feel the groaning sounds of the avalanche starting to move.
Re the SB market: inventory is up and the median price is up. People are talking bubble here, but most people think “not here, in paradise.” Houses are sitting on the market, or people are taking them off the market when they don’t sell. The middle class here (what little exists) is totally tapped out; no one is buying mid-range houses. I knew the forecast would come out all roses about the local market; not even economics professors can wrap their minds around a housing plunge in SB. But the fact remains that, as the forecast pointed out, our already low wages are going lower. Another fact is the most people in the middle class who bought houses in the last five years did so using ARMs, with the expectation that in five years their salaries would go up. My take: SB is no different than any other place, and it might even be more vulnerable to a bubble since the middle class is running screaming from the area (my son’s class, last year, lost 5 students). Despite what the economic forecast people seem to think, there are a lot of dumpy tract houses here (albeit with granite counters in the kitchen) in dumpy little neighborhoods–many are currently on the market for upwards of $1.2 million. These are houses that, in the midwest, would be selling for, my guess, around a million dollars less. People are getting it into their heads that now is the time to cash out. Plus: this isn’t really paradise. Today it was overcast and gloomy — the gloom is a constant reality here. It’s pretty here, but so are a lot of places.
This is a perfect description of what is going on in Marin County, your northern sister also named Nimby. But even I am starting to have doubts that the bubble will burst here.
Hi BookishBetty –
I was struck by this remark in your comment:
“Despite what the economic forecast people seem to think, there are a lot of dumpy tract houses here (albeit with granite counters in the kitchen) in dumpy little neighborhoods–many are currently on the market for upwards of $1.2 million. These are houses that, in the midwest, would be selling for, my guess, around a million dollars less.”
I am quite familiar with midwestern housing, having owned a home there. Dumpy little tract homes sell for under $100K, and $1 million buys you an estate with serious acreage.
Are you sure you’re not talking about the SF Valley, CA?
OT,
This price is nuts!
http://realtor.com/FindHome/HomeListing.asp?snum=51&locallnk=yes&frm=byzip&mnbed=0&mnbath=0&mnprice=0&mxprice=99999999&js=off&pgnum=6&fid=so&stype=&mnsqft=&mls=xmls&areaid=94002&poe=realtor&zp=94002&sbint=&vtsort=&sorttype=&typ=1&typ=2&typ=4&x=63&y=17&sid=068A1203D4F3C&snumxlid=1059140368&lnksrc=00002
Where the heck is Belmont?
North Bay area… Northern Ca. Near San Carlos, San Mateo, Burlingame
Belmont is a fairly crummy town about 30 min south of San Francisco, west of Hwy 101. There are some homes up in the hills with good views, but they are mostly old, deteriorating bungalows with little spacing between them. Definitely not a premiere location on the peninsula. At 2400+ sf, this home is bigger than most, but definitely not worth the asking price, unless it has solid gold toilets.
Not even with solid gold toilets is it worth that. Solid gold toilets do not add to the value of the home. It’s all about square footage and dirt
well, at least solid gold toilets increase in value a few % every day now; can’t say that of the homes themselves any longer
Have you checked your gold prices lately? Soon the price of gold toilets will exceed the comparable price of McMansions, the way we are headed…
“24 percent now say that a bubble is likely within a year..only 7 percent expect it in their own backyard.”
The denial is rampant. I just talked to a neighbor who told me all the reasons why our area is not going down. It almost convinced me, almost.
Wackiest products…
http://americaninventorspot.com
As recently as a year ago, Gallup (found) just 23 percent of Americans were even moderately familiar with the term. In the latest survey, that jumped to 40 percent.”
I’m sure that fewer than 40% of Americans can find Canada on a map of the world, name the vice president, or explain the difference between an ARM and a 30-year fixed mortgage, so this is an impressive figure.
let me guess … those 24 percent expect to sell their ‘investment’ with huge profits in a year from now?
It blows my mind that we’ve JUST GOTTEN STARTED and San Diego has already set a record for most number of homes on sale- EVER.
That fact alone is worth a Primetime Live Special.
The fact that this has happened THIS EARLY in this correction should make people understand something more than it’s a ‘Mad Dash for the Exits.”
That fact should let all of us know HOW HUGE this thing is going to be.
All it’s gonna take is a few flippers cutting hundreds of thousands off their prices so they won’t go into foreclosure…and…
KABOOM…
The dominoes begin to fall, in rapid succession.
When I say this, I really, really, really mean it…
ALL HELL BREAKS LOOSE IN SEPTEMBER.
That’s when the ‘Mad Dash for the Exits’ becomes the ‘People Who Got Trampled Underfoot at The Who Concert’.
Dominoes, my friends.
Dominoes that reach across America.
Why September? Because people will be angry their houses up for sale did not sell in the summer?
The absolute WORST months to sell real estate in are October through February. People don’t like cold weather when buying homes.
But more importantly…
…This inventory build up began January 1st.
Most of the homes that were listed then did not sell. They’re just sitting there, rotting.
If those homes- most of which were flipper homes- are still there in September- that makes it 9 months on the market.
That’s the ‘freak out’ point.
9 months on the market, going into winter.
Dominoes.
I think you’re right, auction. At that point, summer is over and kids a back in school, and the flipper is low on cash and looking at another long, expensive winter. Plus, more and more ARMs are resetting (I forget how many trillions of dollars worth in 06 and 07), and you can bet that there will be plenty of flippers staring at a 50% rise in their monthly payments.
why after 9 months? In my area of the Netherlands, 10-20% of the inventory has been on the market for some years already, and nobody seems to worry about that.
If Bernanke lowers rates a little after summer (which looks increasingly likely) he can easily prolong the bubble with another year.
nhz –
It is obviously different in the Netherlands, because your flippers have deeper pockets than ours (maybe because you have less suicide lending?). Our flippers will not be able to sustain their cash burn rates through a period of stagnating then falling home prices, and will have to dump.
Wouldn’t we want to compare inventory for sale/total inventory in order to compare apples-to-apples?
I don’t think it is as striking that we’ve hit the previous inventory peak as how LOW it just was! It NEVER should have gotten below 5K or so.
The ‘Perfect Storm’ begins in September.
High prices all summer long.
Conflicting stories in the media…all summer long.
An exhausted market.
A dying mania.
No ‘greater fools’ left.
It IS NOT…
I REPEAT…
It is NOT…
The time to BUY in September.
It is the time to WATCH.
We’re going to have lawsuits, appeals to congress, weepy stories directed at Mr. Ben Bernanke, and very, very angry people coming to Ben’s incredible blog…
…in September.
Get ready for this, folks.
We’re going to be known as the scum, the reaper, the evil, and the greedy very soon.
Let them have the summer.
“I told you so” starts in September, not now.
Mr. Bernanke will cease the rate hike in October.
Back in October of last year, I said this spring would be the ‘Slaughter of the Speculators’.
That was correct.
Now, the HOMEOWNERS going to be watching their perceived wealth float away.
May 1st begins a new exodus.
Actual HOMEOWNERS putting their homes on the market.
Not flippers…HOMEOWNERS.
If you don’t believe me, get the hell out of your four walls and walk out your own door.
Go to Home Depot.
Act like you actually need something, and stand in line.
The fear is palpable.
People KNOW they’re behind.
In Orange County, this fear translates into PANIC.
Something you all might not know about humans in Orange County…
The LESS they talk, the MORE scared they actually are.
Kinda weird, but true.
Expect very quiet lines, with people being nice to each other.
Is this similar to the days after 9/11?
You bet your wallet it is.
The same fear that drove this market up will drive it down, and just as fast.
When homes fall to pre-2000 levels, people will be wanting to make me a saint, or wanting to cut my throat.
You can give me all the bullshit you want about jobs and the economy and God and whatever…
…it doesn’t mean a thing.
The people who bought recently were motivated by one very simple human emotion…
FEAR.
Think about the Re-Action.
Fearful People motivated by Fearful News of not just homebuilders, but flippers DOWN THE STREET cutting prices by hundreds of thousands.
It’s one thing to read about ‘The Bubble’ in the news.
But when the vacant flipper house next to you lists for $200,000 less in September…and you bought your overpriced house next door based on FEAR…
I know.
You’ve all been wondering what the hell “All Hell Breaks Loose in September” meant.
It ain’t hyperbole.
It’s freakin’ dominoes…based on FEAR.
I’ve been trying to warn them, though.
They all probably think I’m certifiable.
The smart ones of them won’t though.
If you’re in Real Estate…get the hell out of it, as fast as possible.
I’m not a fearful individual.
I swim with sharks every other day.
I know that there were only 23 shark attack in THE ENTIRE WORLD last year.
THE ENTIRE WORLD.
Yet, people are afraid of the ocean, but don’t mind driving their cars 85 miles and hour on the 405.
This kind of disconnect tells me something.
It should tell you something, too.
You don’t have to be a psychic to see what’s coming in September.
When the ‘herd’ freaks out, it’s never pretty.
This September just might set a milestone.
Now you all know what I mean.
If you know people in danger…get them out. Risk your friendship. Be brave. They’ll thank you later.
The Fearful need the Strong to show them the way out.
Be Strong.
Please understand something, though.
I don’t want people to be miserable.
I want them to listen to REASON.
We’ve got four months, and the clock is ticking.
I’m watching, and Mr. Bernanke’s watching.
Do we bet on greed, or will intelligence intervene?
Only time will tell.
Talking to friends has been a no-win situation for me. They think I’m a bitter renter and I think it’s not my duty to save them from their own stupidity. I wasn’t even able to convince my mom NOT to buy a condo last summer; last one she sold in 1999 and lost her ass.
At least ALL of them are now seeing my point that the real estate market is going done.
Excellent post Auction Heaven in ‘07. I’m expecting the bloodbath to begin in September - the bleed out to continue for years to come. This isn’t going to be pretty. The recently announced upbeat economic news isn’t going to put dinner on anybody’s plate once the stampede begins.
The big HBs attempted to corner the land market the same as the Hunt bros did to the silver market in the late 1970s, by buying up the buildable land when it was cheap at the end of the last housing bust. Judging from the value of Robert Toll’s stock sales last year, I would say the HBs succeeded where the Hunts did not. Unfortunately for recent buyers of McMansions in bubbleland, the mania premium paid to own these ugly, oversized tract homes represents the money which went into Robert Toll’s and other HB insiders’ pockets last year.
Check out the way insider purchases were well-timed to first kick the crap out of Toll Bros stock (last July), then to goose it back up again (this spring):
http://tinyurl.com/lm24p
I think regarding the housing bubble, there is a great quote by Don Rumsfeld that fits the situation perfectly:
“there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns - the ones we don’t know we don’t know.”
I bet the unknown unknowns will hit us unexpectedly.
A Black Swan will provide the synchronizing signal which, in historical retrospect, will be ascribed the blame for the housing market collapse. What possible form will it take? I personally don’t know and cannot predict, but myriad possibilities come to mind:
- GM bankruptcy?
- Fannie Mae bankruptcy?
- More bad hurricanes in the Gulf?
- Escalating tensions with Iran leading to gas prices stuck over $3/gal?
- Collapse of the Icelandic debt bubble starting the crack in the ice which supports the global credit bubble?
- Currency devaluation?
Do not think FNM will go under. After all, Tom Lawler was Sr. VP of Risk Management for FNM.
Excellent. Speaking of ‘unknowns’ — Take an informal survey of ten of your friends/acquaintences who pay mortgages and ask them what they would pay per month to rent their house versus their current mortgage. I think you’ll be surprised…
>Echoes of housing prices? Not exactly, because you can’t flee the
>housing market without living on the street.
Or, errrr, ummmm, RENTING maybe? You know, if you don’t like appartments, there ARE ACTUAL HOUSES you can RENT.
And in the more bubbly areas, you can save a lot of money RENTING vs. THROWING YOUR MONEY AWAY on MORTGAGE INTEREST, TAXES, REPAIRS, etc.
Forget it, I give up on journalists.
“…Still, an almost pyramid-like frenzy has engulfed some areas in recent years, with buyers convinced that within months they will find someone who will pay even more for them.”
Asked my bro this morning (he dropped 500k on someone else’s one-year flip in ‘04) a question on RE for the first time in a LONG time (too many fights whenever the topic came up). Asked him what he thought about the RE news lately. He said he’d likely be stuck in his home for a while, as he wouldn’t be able to pocket much money with what his house is currently “worth.” I asked him then what he though his house was “worth,” and whether HE would be willing to buy THAT house for THAT price were HE currently sitting on the sidelines watching all of this go down. Gave out a slightly dejected “no.” I do love my brother, and I am sure glad that Mom still owns the condo in which we were raised.
John Kenneth Galbraith died today at 97
He was the author of a few really good books about money and speculation.
Damn shame - great mind, great guy. But he lead a full, long life.
Comment by We Rent!
2006-04-29 20:56:15
“…Still, an almost pyramid-like frenzy has engulfed some areas in recent years, with buyers convinced that within months they will find someone who will pay even more for them.”
Asked my bro this morning (he dropped 500k on someone else’s one-year flip in ‘04) a question on RE for the first time in a LONG time (too many fights whenever the topic came up). Asked him what he thought about the RE news lately. He said he’d likely be stuck in his home for a while, as he wouldn’t be able to pocket much money with what his house is currently “worth.” I asked him then what he though his house was “worth,” and whether HE would be willing to buy THAT house for THAT price were HE currently sitting on the sidelines watching all of this go down. Gave out a slightly dejected “no.” I do love my brother, and I am sure glad that Mom still owns the condo in which we were raised.
__________________________________________________________
Family is funny when dealing with this asset bubble. I made tons of money by executing transactions in the nasdaq run up and the family knew it and were a bit envious. However, since I have not engaged in the RE bubble mania (could not find a safe entry point), I’ve sat out and watched. Yet, my brother, who hasn’t executed any transaction in RE since 1988, seems to think he’s sitting on a million dollar lottery ticket. With a rancher on 4 acres and another 25 acre plot, he continually speaks about the worth of his RE. But to me, one has to take the profits off the table, period. The price appreciation will never see his bank account because he DIDNT sell on the other side of the curve. Yet he still speaks of these imaginary profits. When I tell him that residential RE is one of the worst performing “investments”, he generally loses it and says, and I’ll paraphrase, “there are a lot of smart financial people out there who say RE is the BEST investment there is”. Maybe so if we’re talking commercial RE or rental property but a primary residence is a poor performer when you back out transaction and carrying costs. He doesn’t like to hear that. He always want to hear what the liars tell him.
They also don’t like to hear that at current expected appreciation rates of 5-7% (according to NAR) that a passbook checking account with 5% interest is a much better deal for an investor. No hassles with renters, insurance, etc.
One of my friends just wiped out her house to buy an investment property that she cannot acquire insurance for because of the hurricanes. Yuck.
Welcome speculators! From Lew Breeze’s San Diego site. Only 611 days on the market @ $632 per month HOA fees. No need to reduce the price here, after all, realestate only goes up!
Cityfront Terrace Marina $799,000 to $869,000
2 2.00 1211 1 #1205
HOA Fees: $632
Days on Market: 611
OT but the LA Times has a special feature on unique real estate in the LA area.
A history of paradise
What’s interesting is the undertones of “everything is different here” and real estate euphoria can be sensed even in the interactive slideshow. Be sure to look at #15 on the map!
the NY Times is a joke. I take great joy in their continued unprofitability
well when they employ those who cruise the blogs and even with the rich material STILL have to borrow from us rather than offer up their own version of an original story idea… it makes you scratch your head now doesn’t it? Shouldn’t it be the other way around?
I’m an MD and feels that housing on the CA Central Coast is overpriced. Move’d in for the weather 6 mos ago and still renting.
John, I would say that almost all of coastal California is overpriced as well as much of the inland. Renting is a much better value until prices drop. And do not be fools into buying the first dip (20-25%), wait it out and you will be able to buy at a steep discount or 40 to 50%.
Case in point, local house (OC) sold for 370k in 2002 is on the market for 949k now. If you take that original price and appreciate at 4% per year you will get something like 432k and that is the price that house should be selling for. And that is being generous in assuming that the original 370k was no overvalued.
Hang tight, enjoy your rental and watch the show.
Bruce Toll isn’t a buyer, he’s a seller!
03/03/2006: 2,329,196 UPCS Open Market Sale
proceeds of $21,916,157.39
(he’s probably just diversifying his portfolio)