Comments on Doctor Housing Bubble Blog: Real Homes of Genius: Special Edition, Lifestyles...

Mmmmm, what beats me is how somebody so knowlegdea...

2007-09-05T02:21:00.000-07:00

Mmmmm, what beats me is how somebody so knowlegdeable about the housing market can oversee that the price of a house is not only a function of the discounted summed-up rental returns minus (transaction) costs etc. but also of the discounted expected sales price. And for those believing in a continuing price increase, it is only rational to invest more than the sum of expected rent. This is not to say that you didn't pick excellent examples for excesses in the market. You did. And made a very funny presentation. Thank you for that.

MMABI was in your shoes during the last big bubble...

2007-06-12T12:45:00.000-07:00

MMAB
I was in your shoes during the last big bubble peak in CA circa 1986-1991. Prices declined until about 1997, we waited the whole thing out in a rent controled Santa Monica apartment (sweet) - we had saved big down payment and were in perfect position to buy, and we statred looking as the prices started to turn around in '96. I suddenly got a job offer elswhere in the US and we ended moving and buying at the bottom in another market (now a big bubble as well). My take is you have to wait for at least two more years.
My buy signal would be several months of INCREASING volume and increased YoY prices. You don't want to ride this down. I had friends who took checks to the closing when the sold in CA in 1995 in Orange County. There is a lot of down cycle still ahead.

Hey what are your thoughts on our site Real Estate...

2007-05-30T15:19:00.000-07:00

Hey what are your thoughts on our site Real Estate Compete. Sellers get to choose between competing realtors based on commission, experience, and other factors. So the agents get more good homes to represent, and the sellers get the choice of paying lower or higher commissions based on quality of the realtor.

This commentary is hysterical!!!!! I love your com...

2007-05-26T11:36:00.000-07:00

This commentary is hysterical!!!!! I love your comments on the featured homes for sale. On a serious note. The hosuing market is insane. I would never pay the prices people are asking. I have a friend who paid $100,000 for a one bedroom condo in hollywood thirteen years ago. He could now sell for about $600,000 and the rent on the unit would be about $2,000 a month. I know thirteen years is a long time but the current rates are still outrageous. It is infuriating.

Wow!! Excellent blog post! I'll definitely mention...

2007-05-25T21:57:00.000-07:00

Wow!! Excellent blog post! I'll definitely mention in our next podcast!!

Andrew
http://www.InvestorReviewPodcast.com

Hello,I just got a new site through real estate we...

2007-05-25T21:03:00.000-07:00

Hello,
I just got a new site through real estate web design they told me it takes time to gain rankings or even be listed on the search engines. Is that true? Please advise.
Thanks

Hmmm, not sure what the point of this blog was.ht...

2007-05-25T20:12:00.000-07:00

Hmmm, not sure what the point of this blog was.

http://www.realestatewebmasters.com/blogs/james-boyer/morristown-real-estate.html

Thanks, all, for your comments and advice!In truth...

2007-05-25T09:36:00.000-07:00

Thanks, all, for your comments and advice!

In truth, we are waiting until next Spring to SERIOUSLY consider buying. Those of you who read this blog regularly, saw that we had put a low-ball offer in on a home. But we actually pulled the offer when we realized that the street the home was on was slated to become a major thoroughfair (transformed from a quiet residential street). Oops! Not happening...it pays to do your research!

I only approached the loan officers because, in the changing mortgage environment, I wanted to see what we COULD qualify for. It's tough to know with the regulations always changing. I want to stay current on our options.

So the minimum amount of time we're waiting will be a year. Still, I'm out there looking. If we find a seller willing to entertain a SERIOUS low-ball offer (like, 30% off asking price) we might buy.

I know all the arguments for not buying...upkeep, spending the weekends fixing up the house...make total sense! But the homes in our area are RENTING for the same price it would take to just pay a mortgage. All those FBers trying to become landlords. If I'm going to put time and money into home upkeep, I'd like to get some appreciation for it.

Couple that with the fact that the specific area where we're looking has LARGE lots (so we can eventually add on or rebuild) in a gritty up-and-coming area (where prices are still low) less that 3 miles from the beach (location, location, location!)...and we'll probably just live there for 25-years, pay off the mortgage and retire with no home payments. Enjoying the ocean breezes all the way!

I feel like it's a good move if we're planning on being "lifers" in that area. But in the shorter term, renting is definitely the way to go. We're just running out of room with one kidlet (and hopefully, another on the way, soon) in a two-bedroom townhome.

Wish us luck! And thanks again for all the sound advice!

- MMAB

Are these prices for real? I thought S. Florida w...

2007-05-25T09:08:00.000-07:00

Are these prices for real? I thought S. Florida was bad, where I was renting a $400,000 house for $1,800.

MMAB -I know the pressure of wanting a house. But...

2007-05-25T08:12:00.001-07:00

MMAB -

I know the pressure of wanting a house. But seriously, with a growing family, you might actually find that renting a nice larger apartment is actually going to give you the peace of mind you need.

Owning a house, unless it is a brand new house, is always a lot more work than renting. I know, I've owned a few houses and I can tell you it is a never-ending series of weekend projects to keep that baby in shape.

Once you have kids, you will have no time left to make sure the plumbing still works, the roof is intact, the bugs aren't growing in the walls and your electricity isn't shorting in some random spot.

You may be lamenting your fate right now but I can assure you that things are actually working for the best. While you may feel you have less space, you will end up with these bonuses:

1. You will spend far less time cleaning/vacuuming/dusting. More time for your wife and kids, more free time for you.

2. You will NEVER have to worry about what happens when an earthquake comes and damages your house, cuts off your water main or damages the street that connects to your cul-de-sac.

3. If a convicted sex-offender moves into your street, you can pick up and leave and keep your sanity.

All of these bonuses are NOT afforded to home owners, even those who can afford their mortgages.

There is a reason the richest people in the world rent their townhouses. They don't have time to spend being the butler and facilities manager of the very building they live in. That's a full time job, and the reason most buildings pay a facilities manager. Don't sign up for that job if you're embarking on another, more crucial one - child rearer.

Man, with these mortgages I could totally get a sw...

2007-05-25T08:12:00.000-07:00

Man, with these mortgages I could totally get a sweet seminar tour deal with Robert Kiyosaki. Who needs positive cash flow when you can give a motivational speech to literally tens of people and maybe even get a 5 minute spot on the local news? Why have money in the bank when you can have all the other benefits of success so much easier?

@ MMAB: the longer you're renting, the more you'll have saved and a CD appreciates at the same rate as a home, and frankly if you are a good value investor (or a really lucky speculator) you'll have beat all the "homeowners" in spades after they finally pay that damn mortgage. It's a sad state of affaris where having a "Home ATM", refinancing to use the equity to pay off debt, then running back up in 9000 credit debt again is the rule, and it's a shame those people believe they have got more status, but in another ten years or so we're all going to laugh at them. That, or they'll still be laughing at us and the "interest" we earn on "investment" (words that will be hard for them to pronounce)

@ All: I understand that SoCal is still an above-average bubble. Here on the East Coast, we had DC "owners" crying to the Post over how they couldn't find renters for their $400k mortgages which had lost 25% of their value and they were "forced" to live in the place themselves, so prices have already fallen there where it is *almost* possible to get above negative cash flow on rent. But here in NY (NYC, Jersey, Long Island, Connecticut) homes are priced still at tremendous rates--prices in Manhattan have been dropping but at a meager few points a year. New one-bedroom flats in Williamsburg sell for half a million, old ones sell for 300, and row houses and sometimes even just 30X100 lots go for a million. In my mind, you've essentially got two supply and demand curves--one is the renter's and the other is the buyer's. These are becoming enclaves of the rich--when you have people earning 50 a year living or receiving support from their parents, well, something strange is happening at a social level.

MMAB,The stalemate you speak of will not go away u...

2007-05-24T20:08:00.000-07:00

MMAB,

The stalemate you speak of will not go away until the dark clouds of winter set on the real estate shenanigans. See, sellers still believe that somehow this summer will spell certain relief and that the bubble is over. All the rhetoric is such that "nationally" the housing bubble is hitting a bottom. But looking at California we have yet to see any significant declines. We are atypical of the nation.

You should run the numbers and if you can, wait it out. Why not save up for a few more months? Why rush at the point where we are starting to go off the cliff?

Thanks for keeping us posted.

starve the beast,

This is the massive dissonance in the current market. Soon all sellers will get the message that the ball is no longer in their court.

I went to a few open houses in Highland Park a whi...

2007-05-24T14:30:00.000-07:00

I went to a few open houses in Highland Park a while back - they were literally next door to each other. The houses were very similar, but one was priced $90K more than the other. Guess which one is still on the market.

You said it all, MMAB!

2007-05-24T14:24:00.000-07:00

You said it all, MMAB!

A month or two ago, I contacted some loan officers...

2007-05-24T11:11:00.000-07:00

A month or two ago, I contacted some loan officers to see what my family could qualify for...and they've been pestering me non-stop ever since.

Out of all the "fazza gazza" salespeople, one LO has actually been very cool, surprisingly honest, and just an all-around great guy. Color me shocked!

Anyway, he emailed me this morning saying rates have started jumping and I should try to lock-in my rate as soon as possible, to not get screwed. He was very cool about it, not trying to sell me.

So I decided I should be honest with him, and sent him the following email:

Dear Loan Officer,

Thank you so much for the info! I really appreciate your candor.

We are furiously looking for a home, but everything right now is priced WAY TOO HIGH in our area. And this is for small, modest, starter-home fixers...which technically people with our income SHOULD be able to afford. Right?

But it's like the sellers still haven't accepted reality that their homes won't sell for the same price as two years ago. Or, they've HELOC'ed and refied all the equity out of their homes, so they can't afford to negotiate until the bank ends up taking the house and throwing an auction.

Inventories in our area are climbing toward a record high...but buyers aren't touching anything. I went to two open houses this past weekend. We were the only ones who showed in the half-hour we spent in each house. The realtors looked really bored, but in both cases said the sellers were "firm" on their asking price, with a defeated shrug.

Sellers don't yet realize that since subprime has gone bust, first-time homebuyers are only able to afford standard, 30-year fixed - but qualifying for MUCH lower amounts than in years past. Plus, they now have to have a down-payment.

The tension from the standoff is palpable. Having rates go up is just going to screw the "won't budge on price" sellers even more...as more and more homebuyers are priced out of the market.

I don't mean to sound callous, but maybe rates rising and things getting worse is exactly what we need. If we can't afford to buy anything without a 30% price cut, how can anyone else?

We continue to furiously look for a home (because, despite the crazy market, we have a growing family and actually NEED a house) but I'm starting to think it will take much longer than we originally thought. I would love to lock in a low rate tomorrow, but not if it means leveraging my family's financial future on a ridiculously-priced house that will lose value over the next 5 years.

I'll keep you posted...thanks again.

- MMAB